Are you planning a major home renovation project? Looking to send a child to college? Fund your retirement plan? There are options to tap the equity in your home to help you get to the next level in your life's journey.
But what solution is the best for you? A line of credit? Cash out refinance? Only by exploring the pros and cons of each in context of your personal financial profile, goals and needs can you come up with the right solution - for you.
I won't tell you something you don're already know deep down at your core. I just ask the questions that will bring the right answer to light and help provide the math involved in order to justify the logic.
An equity line is a seperate loan placed in addition to your first mortgage allowing you to utillize your equity now, rather than waiting until you sell your home. This type of loan is usually variable in rate, meaning it can go up or down every month, and you can continue to draw on the available balance unti the period is over, kind of like a credit card. A second mortgage is fixed, with a fixed interest rate and payment. No additional draws are allowed after the first payout.
The cash-out refinance, on the other hand is a new 1st mortgage, where you receive a payout of cash to you at the close of escrow. The rate and payment is typically fixed, and because this is usually a 30 year mortgage, the payment increase is minimal when compared to the equity line or 2nd mortgage.
Which is best for you depends on a number of variables, such as how long you will need the cash and how quickly you might be in a position to repay, how long you intend to stay in the home and whether cash-flow is more important or saving on interest payments.
The only way to know for sure is to talk is to talk with a professional about your options.
Email me or call 415-345-4375 to arrange a consultation. I'm well versed and thoroughly experienced in cash-out refinancing and and am more than happy to explain your options.