Take advantage of your home equity.
A home equity loan or line of credit is a second loan against your home which generally has a much lower interest rate compared to other loans. The additional money you'll have access to through your home equity can be used in multiple ways for your financial benefit, such as:
Before you can utilize your home’s value you'll
need to calculate how much equity you have in
your home. Meaning, the price for which your
home could be sold on the market today, less any
debts registered against the property, such as mortgages and secured credit lines.
Buy a vacation home or investment property.
Invest in your child's education.
Renovate your home.
Consolidate outstanding debt.
Here is a basic calculation to help you determine your amount of equity:
Current market value - all debts registered against property = available equity
A home equity loan can help you pay for life's necessities when you have no other way.
Cash Out Refinance vs Equity Take-Out
A cash out refinance and a home equity loan might seem the same - they both result in you taking out money and owing more money on your home - but they differ in a few key ways:
A cash out refinance changes the terms of your existing mortgage, whereas a home equity loan or line of credit function as a separate loan
A home equity loan or line of credit allows you to keep the terms of your existing mortgage
A refinanced mortgage generally has a longer term than a home equity loan or line of credit