Home Equity

Better Rate. This can be especially beneficial when you’re making additional principal payments toward your loan every month: (1) You’d be saving on interest as a result of these additional principal payments, and (2) when current rates provide an opportunity to refinance, having more equity in your home could help you get a better interest rate. For example, with all other factors being the same (credit score, property type, etc.), someone with 40% equity in their home could get a better interest rate than someone with 20% equity in their home. 

Cash Out Refinance. With a cash-out refinance, you are replacing your existing first mortgage with a new, larger one. This new mortgage pays off the outstanding balance of your current loan, and the additional amount borrowed is given to you in cash.

HELOC. With a HELOC, you’re establishing a revolving line of credit secured by your home’s equity, allowing you to withdraw funds as needed, up to your approved credit limit. You can think of it as having a credit card tied to your home’s equity, where you can borrow, repay, and borrow again within a specified timeframe. HELOC terms can vary among lenders, covering aspects like the minimum initial draw, subsequent draws, maximum line amount, draw period, and repayment period. Note, a HELOC is not a refinance of your first mortgage; it’s an additional loan atop of the existing first mortgage. Therefore, you’ll need to manage payments on both the first mortgage and the HELOC.

Reverse Mortgage. The Reverse Mortgage is a program designed for older homeowners, aged 62 or older, to help meet their financial needs in retirement. There are no monthly mortgage payments of principal & interest required, although you are allowed to make payments if you choose. You do not give up ownership of your home and you can still pass your home on to your heirs. With a Reverse Mortgage, you can convert a portion of your equity to receive a lump sum, receive regular monthly payments, or establish a line of credit where the unused portion grows larger over time. You must continue to meet the loan obligations, which include occupying the home as your primary residence and remaining current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees (if applicable).

If you’d like to learn more about Reverse Mortgages, you can visit the Reverse Mortgage Page on our website.