3 Considerations When Deciding Between a HELOC, Equity Sharing Agreement, or Second Mortgage
If you're a homeowner looking to access the equity in your home, you may be wondering what the best option is for you. Should you get a home equity line of credit (HELOC), enter into an equity sharing agreement, or take out a second mortgage?
Each option has its own pros and cons, and the best choice for you will depend on your individual circumstances. Here are three key considerations to keep in mind when making your decision.
1. How Much Equity Do You Have in Your Home?
If you don't have a lot of equity built up in your home, you may not be able to qualify for a HELOC or second mortgage. In this case, an equity sharing agreement may be your best option.
2. How Much Money Do You Need?
Another factor to consider is how much money you need. If you only need a small amount of money, a HELOC may be the best choice since you can only borrow what you need and only pay interest on the amount you borrow.
3. What Are the Terms of the Loan?
Finally, make sure to compare the terms of the loan before making a decision. HELOCs typically have lower interest rates than second mortgages, but they also typically have shorter repayment terms. Equity sharing agreements can be more flexible, so make sure to compare the terms before making a decision.