Getting Equity Out of Your Home
When you buy a DiCharry Home, you are making an investment. And there are some circumstances when you may need to dip into that investment for one reason or another. When you do so, you are accessing the equity of your home. Getting equity out of your home involves tapping into the value you've built up in your property. Home equity is the difference between the current market value of your home and the outstanding balance on your mortgage. Here are the different ways you can get equity out of your home should you need to in the future.
Home Equity Loans
A home equity loan, also known as a second mortgage, allows you to borrow a portion of money using your home's equity as collateral. You receive the funds in a one-time payout and repay the loan with fixed monthly payments over a set term.
Home Equity Lines of Credit (HELOC)
A HELOC is a revolving line of credit that lets you borrow against your home's equity as needed. It functions like a credit card with a credit limit based on your home's value. You can draw funds, repay, and redraw during the draw period, usually 5-10 years.
Cash-Out Refinance
With a cash-out refinance, you replace your existing mortgage with a new one that has a higher loan amount. The difference between the new loan amount and the existing mortgage is taken as cash. This option may come with a new interest rate and terms.
Reverse Mortgages
Reverse mortgages are available to homeowners aged 62 and older. They allow you to convert a portion of your home equity into cash, often in the form of monthly payments or a lump sum. Repayment is typically deferred until you sell the home or pass away.
Home Equity Sharing
Some companies offer equity-sharing arrangements where they invest in a portion of your home in exchange for a share of the property's future appreciation. This allows you to access cash without taking on additional debt.
Home Equity for Home Improvements
Making strategic home improvements can increase your property's value, subsequently building more equity. Renovations that add square footage or enhance the overall appeal of the home are likely to yield a positive return on investment.
Before pursuing any method to access home equity, it's crucial to consider the associated costs, risks, and implications. Interest rates, fees, and repayment terms vary with each option. When you meet with your mortgage lender, they will be able to advise you according to your unique financial circumstances as well. At the end of the day, though, owning a home opens you up to a world of options. If you are ready to invest in your future with a home, start here with DiCharry. Take a look at our available homes today!