Home equity financing can supply cash for a variety of expenses. Here are some things to think about that can help with deciding if home equity financing can work for you.
- Current home value: Home equity loans are based on how much home equity you have, so you'll need to know how much your home is currently worth for determining how how much you can borrow.
- Home Equity: Your home equity is roughly the difference between your home's current value and the amount of mortgage debt owed against it. In today's more conservative credit environment, it can be difficult to get a home equity loan if your mortgage loan balance(s) are more than 80% of your home's current value.
- Real estate trends in your neighborhood: Home equity is directly influenced by your home's value. Check with real estate professionals specializing in your neighborhood to learn whether home values are stable, rising, or falling; this information can help you decide if a home equity loan is feasible or too risky.
- Purpose: A home equity loan works for one-time expenses of a specific amount (for example funding a major purchase or paying off credit card debt). A home equity line of credit can finance ongoing expenses such as home remodeling, college tuition, or anything you'll be paying for over time.
- Measuring short term needs against long term goals: Getting a home equity loan for debt consolidation works only if you don't incur more consumer debt. When considering a home equity loan, review your current financial situation and goals with a financial advisor for identifying solutions that best meet your needs.
Get several mortgage quotes from home equity lenders. Compare current mortgage rates and terms for finding your best deal.