If debt's got you down or you've got to pay for your daughter's wedding, consider using the equity in your home for a cash infusion.
Tapping the equity in your home when you need cash could be a good idea, but it needs to be carefully considered. This chapter will explain the pros and cons of using refinancing your home, taking out a home equity line of credit (HELOC) or a home equity loan. There are tax implications to consider also. And of course you don't want to do anything that would jeopardize your home. After you read this, you'll be able to make an informed decision.
What you can expect to learn from this chapter:
- Refinance vs. home equity loans
Whether you refinance your home or choose a home equity loan depends on the interest rates and the length of time you need to borrow the money.
- Understanding cash-out refinance
A cash-out refinance is basically a new mortgage on your house. We provide several examples to show you how it works and what are the consequences.
- Lower payments and a tax break
The differences between a home equity loan and a home equity line of credit are outlined. Plus, the tax benefits of the loans.
- Downside of home equity loans
A home equity loan doesn't remove your debt, it just moves it from perhaps a high-interest vehicle to a low-interest one. Read this to be aware of the pitfalls.
- Home equity loan vs. line of credit
When should you choose one over the other? Our questions and examples will help you know.