When you need some extra cash for home improvements, consolidating bills, or other such reasons, you have several options to choose from, including using different types of home loans to tap into the equity in your home. It is important to carefully evaluate each of your options and select the one most appropriate for your particular situation.
Home Equity Loan
Home equity loans are essentially a second mortgage taken against the equity in the home. One drawback is that second mortgages tend to have higher interest rates than your first mortgage. Another option under the home equity umbrella is called a line of credit. Rather than taking out a lump-sum second mortgage, you are given a credit line to borrow against as you need it, much like a credit card. However, the interest rates for this option can, and do, adjust on a regular basis. If you are still unsure, it might be worth speaking to Equity Legal advisers to guide you.
Cash-out refinance loans allow you to consolidate your existing mortgage and equity, and draw out the proceeds in cash. While the interest rates are similar to your existing loan, and you avoid higher rates with home equity loan options, you are basically resetting your mortgage and starting over.
Personal loans are an ideal option when you do not need large sums of money and intend to pay off the loan in a relatively short period of time. Plus, you are not touching the equity within your home.
For assistance with cash-out refinancing programs or to learn about other options, please call Elite Financial at 805-494-9930 today!