What is home equity and how can homeowners leverage it?
Home equity is the difference between the current market value of your home and the amount you owe on your mortgage. It represents the portion of your home that you truly own.
Homeowners can leverage their home equity in several ways:
Home Equity Loans: Borrow a lump sum of money using your home equity as collateral. This is often used for large expenses like home renovations or paying off high-interest debt.
Home Equity Line of Credit (HELOC): Similar to a credit card, a HELOC allows you to borrow money as needed, up to a certain limit, using your home equity as collateral. It's useful for ongoing expenses.
Cash-Out Refinance: Refinance your mortgage for more than you owe, taking the difference in cash. This can be used for anything from home improvements to investment opportunities.
Using home equity can provide access to funds at lower interest rates compared to unsecured loans, but it comes with the risk of losing your home if you fail to repay.