Owning a home is one of the best ways to build up equity. Every month, you are adding more money into your home, until you eventually have it completely paid off. And since homes typically appreciate in value, that means when or if you would like to sell it, you will stand to make a profit. Home equity is also used to back up a line of credit from your financial institution. While this offers helpful security, sometimes life events occur that require significant liquid funds, and you can use your home as a way to free up this money. In today’s blog, Family Home Loan Texas discusses some ways that you can use your home to help you free up cash for large expenses.
Typically, when you refinance, you are doing so to get a better interest rate or change the terms of your mortgage. On the other hand, with a cash-out refinance, you are replacing your mortgage with a new one while gaining liquid assets at the same time. When you go this route, your new mortgage will be higher than your previous one. This is possible as an option because homes usually appreciate in value, which means lenders are comfortable loaning a larger amount since your home is likely more valuable now. With your new mortgage, you will pay off what is left of your previous one and you will keep the remainder.
If you are aged 62 years or older, a reverse mortgage is another helpful way to use the equity you have built in your house to generate funds. It is a loan that allows you to borrow a portion of your home equity as non-taxable income. Instead of paying a lender monthly mortgage payments, as you are used to, with a reverse mortgage, a lender pays you. You do not have to pay any of the money back until you cease living in the home. While this loan is subject to interest and various fees, you won’t have to worry about them until you move out. Depending on the terms of your reverse mortgage, you can receive the money as a lump sum, monthly payments, a line of credit, or a combination of these. Many individuals who take out this type of loan use it on large expenses like unforeseen medical bills, substantial home repairs, or tuition for a family member.
As with most things, it is helpful to fully assess your financial situation to determine if either of these options will be beneficial for you and your family.
Contact Us To Learn More About Using Your Home Equity
When you own your home, you can put your equity to work for you and your needs. We are here to help you achieve your goals. Family Home Loan Texas was founded by loan originator and long-time mortgage professional Rob Bramer. Rob has helped clients secure the loans they need both locally and nationally and can help you get the loan you need to live life on your terms. Call 1-800-990-LEND (5363) to speak with Rob about how he and his team can help you navigate refinancing and reverse mortgages.