Home equity loans are term loans that are taken out against the value of your home already paid or the amount of the home owned. For example, homeowners who have paid 25% of their full outstanding loan balance, say $50,000 of a $200,000 mortgage, have that much equity in their home or how much of their home they actually own.
While understanding the basics is imperative for applying for a home equity loan, knowing when to apply for one is just as important.
Here’s a quick guide to the top three reasons most homeowners take out a home equity loan:
Home repairs
Home improvement projects can be taxing on both the homeowner and the homeowner’s budget. However, if the repair is one that will add value to your home, looking into a home equity loan may be a decent option.
This is usually a great way to reinvest your home equity back into your home, especially if you’ve already paid a significant portion of your mortgage’s outstanding balance.
Debt consolidation
For those attempting to defeat high-interest rates and consolidate their credit, utilizing your home’s equity could be another excellent way to manage your financial situation. Many who have adapted to this type of refinancing have found that taking out a low-interest, term-based loan like a home equity loan helped them regain their financial standing.
By using a home equity loan, they’ve managed to reduce their monthly payments in other financial areas and regained their monthly budgets.
Life expenses
Sometimes life happens. It can also happen in a way that’s more expensive than expected or just as costly as anticipated. Regardless of whether you’re paying for a ceremony, helping with a college tuition or simply need the extra money for an unexpected circumstance, a home equity loan can help you manage your expenses.
Just as with debt consolidation or home improvement, applying for a home equity loan during your more expensive life events can help you keep the payments manageable without over stressing you or your wallet.
Home equity loans are excellent ways to make your home and monthly mortgage payments work for you.
If you find yourself wanting to reinvest in your home or simply need an extra bit of assistance, reach out to a lender of your choosing and ask what options they have available for you. They have formulas and methods that can calculate home equity loan rates based on your specific needs and circumstances.
About the Author
Kimberly Hering
Kimberly Hering's devotion to helping people achieve their real estate goals stems from her genuine enjoyment of the process. Whatever the task, Kimberly makes it her mission to get it done, however she can, without compromising her client's needs. Often, that means thinking outside the box. After working with Kimberly, clients describe her as being Trustworthy, Creative, Patient, Highly Skilled, Attentive to the Process and having a lot of Integrity.
After spending more than 15 successful years working on Wall Street, Kimberly transitioned into Real Estate, joining Alain Pinel Realtors, then moving to Zephyr, now Corcoran Global Living, in 2018. During her career on Wall Street, Kimberly was a Vice President working as an Institutional Equity Salesperson for Montgomery Securities for 10 years. She covered the top money managers throughout the US and Canada. She joined Jefferies & Co as a Senior Vice President managing the Western Region Institutional Sales group, while continuing to cover the top money managers.
Kimberly leverages her extensive experience selling equities to top money managers throughout the US and Canada, to successfully negotiating any Real Estate transaction seamlessly for her clients. Kimberly is well versed in Marin's neighborhoods, towns, cities, and education system.
Living in the Bay Area for 35 years, 25 years in Marin and having 2 sons in local Marin schools, Kimberly spends a lot of time volunteering in the community and serving on various local Boards. Kimberly has a collection of resources ranging from the best local breakfast spots to vetted contractors. With her reliable list of valuable resources, Real Estate experience and unsurpassed knowledge of Marin's many communities, Kimberly can guide her clients through every aspect of a Real Estate transaction seamlessly.
Relocating to Marin, downsizing, upsizing, first time home buying, final home purchase or sale, or a lot to build a dream home, no matter the undertaking, Kimberly works seamlessly until the job at hand is completed with 100% satisfaction.