They say your home is your castle. But in a way, it can also be your wallet, your safety net, and an opportunity to enrich your life—or the lives of your loved ones.
Whether you’re trying to figure out how to pay for home improvements or a sudden medical emergency, your home might be the key to moving forward. But to understand how, it’s important to first learn what gives your home financial power.
What Is Home Equity?
Simply put, home equity is the difference between what your home is worth and what you still owe on your mortgage. Over time, as you make your monthly payments, your loan balance decreases and the amount of equity you have in your home grows. At the same time, when the housing market goes up, so does your home’s value—and your equity rises with it.
If you’ve owned your home for some time, chances are you’ve already built up more home equity than you realize. For many people, however, this equity sits untouched until they sell their home. But there are ways to use your home equity while staying right where you are—and plenty of reasons to do so.
When It Can Help
Your home isn’t just where you live. It’s also a resource that can help you move through life’s big moments with less financial stress. Whether you’re helping a child start college, planning a wedding, handling a family emergency, or making space for a growing household, the equity in your home can give you options. It also allows you to meet these moments without dipping into savings or relying on high-interest credit.
Maybe your child just got accepted to their dream school but can’t cover tuition and housing on their own. Instead of relying on student loans—and having your child begin a new career burdened with debt—you can use your home equity to give them a strong start.
Perhaps your family has grown and it’s time to upgrade your home to better fit your new lifestyle. That could mean a larger kitchen, an extra bedroom, a home office, or a new backyard that brings family and friends together. A home equity loan can be a smart way to pay for it while also adding value to your property.
Or maybe life threw you a curveball in the form of a healthcare emergency or unexpected home repairs. Instead of stressing out, tapping into your home equity can give you breathing room when you need it most.
How to Use It
There are a few ways to turn your home’s equity into cash, the most common is a cash-out refinance. With this option, you replace your current mortgage with a new one that’s more than your current loan balance. The difference between the two amounts is paid to you in cash at closing, and you can use the money however you want. Since it’s rolled into a new mortgage, you’ll have just one payment to manage.
Another option is a home equity line of credit, or HELOC, which works a bit like a credit card. When you get a HELOC, your lender approves you for a set amount based on your equity, and you can draw from it as needed. Since a HELOC is separate from your mortgage, it comes with its own monthly payment. You pay interest only on the amount you use, and the remaining funds are always there if you need them again later.
Yet another choice is a home equity loan, which is a second mortgage secured by your home. You get a lump sum of cash up front, with a fixed interest rate and set monthly payments. It can be a good option if you know how much you need and prefer a predictable payment schedule.
Whether you’re planning something exciting or navigating the unexpected, the right loan can help you move forward with confidence. At Right By You Mortgage, we offer flexible options to help you use your home equity in a way that fits your goals and your budget.
If you’re ready to explore your options, our loan officers are here to help. Find a local mortgage loan officer or send us an email at inquiries@rightbyyoumortgage.com to get started.
