If you have owned a home for several years or more you may have built up home equity. Your house is an investment, and the equity you have there may be useful for a home equity loan when you need it most.
By Craig Friesen
December 31, 1969
Many people make their monthly mortgage
payments and never think to check on how much home equity or investment they have put in. True, for the first few years of your mortgage you may be paying mostly interest and very little of the principal amount. But as time goes on you will begin to bring down the principal amount you owe on your house. At this time it could be a good idea to obtain a home equity loan quote to see how much could be available to you.
How Home Equity Loans Work
The first step is to calculate how much equity you have in your house. This may be as simple as checking your monthly or annual mortgage statement. Your home equity is the difference between the value of your home and the remaining mortgage amount. A home equity loan, then, is a second mortgage on your home, using the equity available. This may be a fixed or variable mortgage, which can be paid out in a lump sum or made available to you through a revolving line of credit. A home equity line of credit can be useful if you only need some of the money some of the time. It essentially acts as a pre-approved loan that you can borrow from or pay back at any time.
What Can I Use My Home Equity For?
A home equity loan can make many things possible for you. Use your home equity for consolidating debts, home renovations, large medical bills, school tuition, or even a new car. Home equity loans are often tax-deductible, too, which makes home equity even more valuable to you.
About the Author
Craig Friesen is a freelance writer and an ordained Mennonite minister in rural Saskatchewan, Canada. He has a Bachelor of Arts degree in Religious Studies from University of Manitoba and a Master of Divinity degree from Associated Mennonite Biblical Seminary in Elkhart, Indiana. A computer hobbyist, Craig operates several home-based online businesses in his leisure time.
*Before you apply any of the advice described on the Hip-home.com website, you should consider if the advice is safe and suitable for your individual home situation and consult experts as necessary to evaluate the suitability for your circumstances.