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Looking to tap into your equity? There are several options and a few things to consider when deciding which is right for you.
If the interest rate on your mortgage is higher than current rates, it may make better sense to refinance and take a lump sum of cash from your equity. You'll simply refinance your mortgage to a larger loan amount and take the difference in cash.
A home equity loan is essentially a second loan that you take out in addition to your first mortgage. Commonly referred to as a "second mortgage," a home equity loan allows you to tap into your equity to get cash without refinancing your first mortgage and usually in a lot less time. A home equity loan is a good choice if you'd like your cash in a lump sum and have a great rate on your first mortgage.
A home equity line of credit, on the other hand, is very similar to a credit card except that it uses the equity in your home as the revolving line of credit. You pay only if and when you use the money. But, unlike credit cards, the interest is usually tax deductible.* You can get a lump sum at closing or only part of your money and draw on the rest when you need it. Unlike a home equity loan or a refinance, you can get a home equity line of credit in as little as ten days. A equity line is a good choice if you'd like ready access to your equity.
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