Home Equity: How to Use It
A refinance pays off your current mortgage and gives you cash based on your equity. These are good for:
- Lowering or locking in your mortgage interest rate
- Getting large sums of money ($30,000 or more)
Home equity loans (second mortgage) are installment loans that are paid out in one lump sum. They’re good for:
- repaying credit card debt
- remodeling projects
A home equity line of credit works like a credit card – you agree to a pre-set limit and then borrow as you need to, or in the event of an emergency, usually for up to 10 years. Good for:
- debt consolidation
- major home improvements