When you require a sizable sum of money, one of the main advantages of using your home equity is that you may frequently access cash at interest rates that are much lower than those of credit cards or personal loans.
Using your home’s equity can be a less expensive option to get the money you need to pay for significant bills like home renovations, college tuition, or debt consolidation.
Gaining access to the equity in your house can also give you more freedom. There aren’t many limits, and you can use the money however you like.
Another advantage of using this method of borrowing money is that the interest on a home equity loan or line of credit may be tax deductible. According to the IRS, the deduction is possible if you spend the funds to “buy, build, or substantially improve” your property.
4 Ways To Convert Equity Into Cash – Plus a *Special Bonus
- HELOC – Home Equity Line Of Credit: A home equity line of credit is a second mortgage with a revolving balance, similar to a credit card, and a variable interest rate tied to the prime rate. However, in some instances, lenders will permit you to obtain a HELOC with a fixed rate. HELOCs typically feature two lending phases over a lengthy time period, such as 30 years. The first 10 years of a line of credit are known as the draw period, during which only interest payments are due. The loan is converted to a repayment period of approximately 20 years, which includes principal installments.
- Home Equity Loan – Second Mortgage: Home equity loans are a second mortgage for a fixed quantity with a fixed interest rate and a set repayment period. It functions similarly to a mortgage and typically carries a slightly higher interest rate than a first mortgage. This is because, in the event of a foreclosure, the home equity lender is second in line for repayment from the sale of the property.
3. Cash-Out Refinance – Replaces Current Mortgage: You can refinance your current mortgage for an amount greater than what is obligated, allowing you to receive the difference in cash. A cash-out refinance replaces your current mortgage, so depending on market conditions, you may be able to obtain a lower interest rate or more favorable terms with the new loan.
4. Sell & Move – List Home For Sale: You can always sell your home and pocket some of the cash before you purchase your next property. This approach works great when you have a lot of equity and only need a portion of the equity to use as a down payment on your next home. You get to keep the difference in cash! *When you sell your primary residence you may not be required to pay capital gains tax on the first $250,000 of profit generated by the sale. Spouses filing a joint return may exclude the first $500,000 gained from the sale of their home. Some rules apply, consult CPA or IRS.
*Special Bonus Program – Buy Before You Sell
You can also choose to Buy Before You Sell when working Path & Post to get an Equity Advance. You can then put your equity to work before selling your current home. Skip the hassle of repairs & showings. Move on your timeline without the stress of moving twice. The freedom to move with little upfront costs by leveraging your existing equity, not your savings.
Learn more at https://www.pathpost.com/buy-then-sell/
