3 Ways to Leverage Your Home Equity
As a homeowner, you have options when it comes to cashing in on your home equity. You can sell your property outright, take out a home equity line of credit (HELOC), or enter into an equity sharing agreement. But which option is best for you?
Here are a few things to consider when making your decision:
1. How Much Money Do You Need?
If you're looking for a lump sum of cash, selling your property outright is likely your best bet. You'll be able to walk away with a sizeable chunk of change that you can use for whatever you please.
However, if you only need a small amount of money or you want the flexibility to borrow as needed, a HELOC or equity sharing agreement may be more advantageous. With a HELOC, you can borrow against your home equity up to a certain limit and only pay interest on the money you actually use. With an equity sharing agreement, you can receive regular payments from a tenant or investor in exchange for a portion of the equity in your home.
2. How Long Do You Need the Money?
Are you looking for a short-term solution or do you need long-term financial assistance? If you plan on selling your home in the near future, cashing out now could give you the boost you need to reach your goals. However, if you're not planning on selling anytime soon, an equity sharing agreement or HELOC could provide you with ongoing income or financial assistance for as long as you need it.
3. What Are the Risks?
Of course, there are always risks to consider when it comes to leverage your home equity. If you sell your property outright, you could miss out on potential future gains in the housing market. And if you take out a HELOC or enter into an equity sharing agreement, you could end up owing more money than your home is worth if the housing market declines.
So, which option is best for you? Only you can decide. Consider your needs, your timeframe, and the risks involved before making your decision.