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help_logoGetting Started on Home Equity


If you're thinking about borrowing money using your home as collateral, you have several options.

Which lending option is right for you depends on a number of factors, such as:
  • how much equity you have
  • how long you plan to stay in your home
  • how much money you want to take out.
Before you decide, you should understand the basics.

      


Know the key differences

When you refinance, you are replacing your current mortgage with a new loan to lower your monthly payments, get cash out to make a purchase, pay off debt or achieve other financial goals. With this option, you will have one monthly payment.

You may find your current first mortgage rate is better than the refinance rate available and you want to keep what you have. Now may be the time to look at a 2nd mortgage, also known as a home equity loan or line of credit.

Home equity loan and Home equity line of credit are two different kinds of loans that are different from your first mortgage and require a separate monthly payment. You borrow against the equity built up as a result of paying your mortgage, so the more you've paid down, the more you can borrow.



Weigh the pros and cons

There are pros and cons associated with each option. Typically, with a traditional refinance , you'll have:
  • Lower interest rates, but higher closing costs
  • Lower payments
  • Longer minimum loan terms
  • More fixed-rate options
With a Xpress Refinance, you'll have:
  • Lower costs than a traditional refinance
  • Competitive fixed rates
  • Flexible repayment terms available
And with a home equity loan or line of credit, you can expect:
  • Lower closing costs, but higher interest rates
  • The ability to borrow up to 89.9% of your home's market value



Consider the benefits

A Home Equity loan or line of credit gives you cash that you can use any way you wish. You can:
  • Borrow up to 89.9% of the fair market value of your home.
  • Interest rates are typically lower than credit cards and other loans.
  • The interest paid may be tax-deductible; consult a tax professional to assess your situation



Understand the risks

Since a Home Equity loan uses your home as collateral, you also need to consider potential risks:
  • You can lose your home for missing payments.
  • The maximum amount borrowed is a portion of your home's value which is determined by the market so if the market takes a down turn you can owe more than your house is worth.