3 Ways to Tap Into Your Home’s Equity without Breaking the Bank
If you’re looking for ways to access the equity in your home, you may be wondering what your best options are. Taking out a loan against your home’s equity can be a great way to get the money you need without having to sell your home or take on new debt. But with so many different types of loans available, it can be hard to know which one is right for you. Here’s a look at three popular options for tapping into your home equity:
Cash-out refinance: A cash-out refinance is a type of mortgage loan that allows you to take out a new loan and use the proceeds to pay off your existing mortgage. This can be a good option if you have built up equity in your home and want to use the money for other purposes, such as home improvements or investing. One thing to keep in mind with a cash-out refinance is that you will be taking on a new mortgage with different terms, so be sure to compare rates and terms before you decide if this is the right option for you.
401k loan: If you have a 401k account, you may be able to take out a loan against it. This can be a good option if you need money for a short-term expense and can afford to pay the loan back within a few years. One thing to keep in mind with a 401k loan is that if you leave your job, you will typically have to repay the loan within 60 days or it will be considered a withdrawal and subject to taxes and penalties.
Reverse mortgage: A reverse mortgage is a type of loan that allows you to tap into your home equity without having to make monthly payments. The loan is repaid when you sell your home or pass away. This can be a good option if you are retired or otherwise don’t have the income to make monthly payments on a traditional mortgage. One thing to keep in mind with a reverse mortgage is that it can reduce the inheritance you leave to your heirs, so be sure to discuss this with them before taking out the loan.