4 Ways to Leverage Your Home’s Equity

man pushing woman in a wheelbarrow
As a homeowner, your home is a valuable asset. It’s not just a place to live, it’s also an investment that can appreciate over time. If you have owned your home for some time, you may have substantial equity. Equity is the difference between what you owe on your mortgage and the current market value of your home. Tapping into your home’s equity can be a great source of cash which can be used for a variety of reasons.

Home Value: $850,000
Current Mortgage Balance: $550,00
Equity: $300,000
 
One of the most common ways to leverage your equity is through a home equity loan or a home equity line of credit (HELOC). Both of these options allow you to borrow against the equity in your home. Here are a few reasons why taking advantage of your home’s equity may be a good idea:

  1. Home improvements: One of the best uses of home equity funds is for home improvements. If you have been putting off a major renovation or repair, a home equity loan or HELOC can provide the funds you need. Not only can this make your home more comfortable and functional, but it can also increase the value.

  2. Debt consolidation: If you have high-interest debt, like credit card balances or personal loans, you may be able to save money by consolidating them into a home equity loan or HELOC. These loans typically have lower interest rates, which will save money on your monthly payments.

  3. Education expenses: Whether education expenses are currently in progress or on the horizon, tapping your home equity may be a good way to pay for the expense. The interest rates on home equity loans and HELOCs are generally lower than those on student loans, which can save you money over the life of the loan.

  4. Emergency expenses: Life can be unpredictable, and unexpected expenses can come up at any time. If you need access to cash quickly, a home equity line of credit can be a good option. A line of credit can be established in advance of needing funds. You can draw from the available balance as needs arise. As you make payments, the funds become available to borrow again.
If you are interested in using the equity in your home, the first step is to find out how much equity you have. You can do this by getting a home appraisal or by using an online home value estimator. Once you know how much equity you have, you can start exploring your options for borrowing against it.

At Pacific Service CU, we can help you explore your options for leveraging your home equity. Our experienced loan officers can help you understand the pros and cons of different types of loans and help you find one that’s right for you. To learn more, visit our website or call a member service representative at (888) 858-6878.