Tapping Into Home Equity: Which Way Is Best?

Refinance Option: Is the interest rate on your mortgage higher than the current interest rates? Then you may want to refinance to a larger loan amount. The difference you take, in cash, will be from your home's equity.

Home Equity Loan Option: An option you may want to consider if you'd like cash in a lump sum, and you already have a good rate on your first mortgage, is the home equity loan. Often called a second mortgage, a home equity loan lets you tap into your home equity without refinancing your first mortgage.

HELOC Option: HELOC, which stands for Home Equity Line of Credit, gives you access to your home equity when you need it. A HELOC is similar to a credit card, but it uses your home equity as a revolving line of credit. Make monthly payments only if and when you use the money. One advantage of a HELOC over a credit card is that the interest is usually tax deductible. Do you want to take a portion of your money, drawing the remainder as you need it? You can do that with a HELOC. Or would you like to get a lump sum at closing? You have that option with a HELOC as well. One other HELOC advantage: it's possible to get a home equity line of credit in as little as ten days - unlike a home equity loan or a refinance - which take longer.

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