Factors When Choosing Between Cash-Out Refinance vs. Home Equity Loans vs. Equity Sharing Agreements
Before you decide how to access the equity in your home, it’s important to understand the different options and their implications. A cash-out refinance, home equity loan, or equity sharing agreement all have different pros and cons, so it’s important to understand the difference before making a decision.
With a cash-out refinance, you take out a new loan to replace your existing mortgage and withdraw cash that is equal to the amount of equity you have in your home. This option can be a good way to get access to cash without having to make monthly payments, but it can also be expensive.
A home equity loan is a second mortgage on your home and you will make monthly payments on the loan. This option can be a good way to get a lower interest rate than a cash-out refinance, but it can also be more expensive if you don’t make your payments on time.
An equity sharing agreement is an arrangement where you sell a portion of your equity in your home to an investor in exchange for cash. This option can be a good way to get access to cash without having to make monthly payments, but it can also be risky if the value of your home decreases.
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