Fast, Easy and Flexible… Access Up to 95% of your home equity without refinancing!
Your home is your biggest asset. You can use the equity to do lot of things in your life, such as home improvements, consolidate debts and pay for college.
Lets Take a look at each Options
HOME EQUITY LOAN
A home equity loan — which works like a second mortgage — allows you to borrow money against the value of your home’s equity. Home equity loans have a fixed interest rate, and payments stay the same each month.
With Home Equity loans, you get the entire amount as a lump sum and cannot get additional money from it for the future.
A home equity loan is a standalone, second mortgage with its own interest rate and its own terms.
Pros of home equity loan:
- Lump sum payment.
- Fixed interest rate provides same payment each month
- The interest may be tax-deductible (consult with your cpa or accountant)
Cons of home equity loan:
- Interest rates might be slightly higher than adjustable rates on HELOCs.
- Interest rates can’t be changed.
- May require subordination to the 1st lien if you refinance the first mortgage
- There is a 2nd Lien placed on the title of your house behind the 1st mortgage lien.
- Two loan payments may be difficult to manage financially.
HOME EQUITY LINE OF CREDIT (HELOC)
HELOC is a revolving line of credit similar to a credit card. You can borrow money up to the value of your home equity and credit limit up to the maximum limit allowed. You can draw cash on an as-needed basis and only paying interest on the amount used. You then repay the principal with interest over a longer period, during which borrowing has ceased.
HELOCs may be a good option for ongoing or fluctuating expenses, where the total amount of funds needed is unknown. HELOCs allow you to just pay the interest during the draw period. After the draw period, you will be paying principal and interest payment till the term or the loan.
Pros of HELOC:
- Flexible payment access money as needed and only pay interest on the amount borrowed.
- Adjustable Interest rates are typically lower than those of credit cards or personal loans.
- Tax deductions may be available if money is used for home improvements. (ask cpa or accountant)
Cons of HELOC:
- Adjustable interest rates that are subject to market changes — if rates increase, your payments may go up as well.
- Overborrowing can occur if not budgeting properly to your need.
CASH OUT REFINANCE
With a cash-out refinance, you refinance your current existing mortgage to new one. The amount you take as cash out at closing is added on top of the current 1st mortgage.
Like a home equity loan, cash-out refinancing provides access to lump sum for large expenses or paying off current debts, and if current mortgage rates are lower than your existing 1st mortgage, it may secure you a lower overall borrowing cost. The new loan will be extended again and suitable for long-term financial objectives.
Pros of Cash Out Refinance:
- Lump-sum payout.
- Interest rate is usually low compared to other types of loans
- Monthly Payments are much lower than HELOC & Home Equity Loans
- Interest paid on the new, large mortgage may be tax-deductible. (ask your cpa or accountant)
Cons of Cash Out Refinance:
- Monthly payments may be higher compared to your previous mortgage if the current market rates are higher.
- You will pay higher closing cost on this type of loan
- Interest rates are usually higher than those of regular refinance loans or purchase mortgages because of their increased risk.
- New loan may be extending the time it takes to pay off your home, potentially resulting in more interest paid over the long term.
Guardian Mortgage offers HELOCs, Home Equity Loans and Cash out Refinances, including cash out refinances on conventional, VA and FHA loans.
Whether you need to take cash out from your primary house, second home or investment property, Guardian Mortgage has all options to serve your need.
UNLOCK THE CASH IN YOUR HOME
Which option is Best?
Determining which loan is best for your situation will depend on several things including how much equity you have in your home and what is your financial goal.
Can’t decide which option is right for you, ask yourself these questions:
- What is the purpose of taking cash out from your home equity?
- What is your financial goal to use the money for?
- How much cash out do you need?
- How long will it take for you to pay off and can you afford additional payment?
- Can you handle unpredictable payments from Heloc option?
- Do you need all lump sum now or as need base?
- Is your interest rate on current loan is higher than current market rate?
Whichever loan option you choose, make sure you have a clear purpose for the home equity you pull out your home.
To discuss a new HELOC, Home Equity Loans, Cash out Refinancing, or any of the other financial services we provide, reach out to us. At Guardian Mortgage, we are dedicated to helping you understand and make the best mortgage financing decisions for you and your family.
