Vantage Point

Make Your Equity Work for You: Home Equity Loans vs. Refinancing

  • Categories: Loans

Owning a home is a huge step for many adults. You finally have a place to call your own, and you’re building equity in an investment. But did you know you could use that equity to cover other debts or expenses?

If using the equity in your home this way appeals to you, you have options: a home equity loan, a home equity line-of-credit (HELOC), or you could refinance.

If you’ve ever heard of someone talking about their “second mortgage,” they are likely referring to a home equity loan. It’s a loan with its own terms, interest rate and payment schedule — independent of, and in addition to your existing mortgage.

A HELOC is the same idea, but it’s a separate line of credit. That means you can access the funds at any time as long as you meet certain requirements, such as not going over your limit and making minimum monthly payments, for example.

With a refinance, you replace your existing mortgage with a new one. With a rate-and-term refinance, the original loan is paid, and the new loan comes with a change in interest rate and/or term. With a cash-out refinance, you receive the difference in the two mortgages in cash at closing.

Refinancing leaves you with just one debt to repay, versus a home equity option that leaves two debts, but it’s not that simple. Each presents unique benefits and one may be better than another for your individual situation. At Vantage, we can discuss your needs with you and offer guidance to help you make an informed decision.

Give us a call or schedule an appointment today to learn how we can help you get the right loan to achieve your goals!

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