How Can I Use Home Equity?

How to

Home equity is the difference between how much you owe on your mortgage and how much your home is worth. It is an asset homeowners can take advantage of for all types of life situations.

Home equity can be used to build wealth or improve a homeowner’s financial situation. The best way to utilize your home equity is with a cash-out refinance. A cash-out refinance is a refinance mortgage that allows homeowners to tap into their equity and withdraw cash. Below are a few great ways to utilize your home equity.

  1. Consolidating debt
    • Debt consolidation allows consumers to roll multiple debts into one single monthly payment.
    • Your home equity can help pay off a single debt or consolidate all your debts into your low interest mortgage payment.
  2. Paying off credit card bills
    • Interest rates on credit cards can range between 16% to 20%– the funds received from a cash-out refinance can be used to pay off this high interest debt and help to improve your credit score.
  3. Home improvements
    • Homeowners can use the funds from a cash-out refinance or other home equity loans to remodel or upgrade their homes—also increasing the home’s value.
  4. Home additions
    • Adding an addition to your home will increase your square footage and home value.
  5. Paying for college
    • The funds from a cash-out refinance or home equity loan can be used to pay for college or to pay off student loans.

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