Use Your Equity To Borrow More Money
The equity that you have in your home, is the value of your home minus the outstanding mortgage balance. You can borrow more money using your equity as collateral in a couple of ways: - Replace your existing mortgage with a larger amount mortgage; or
- Leave your first mortgage in place and get a second mortgage.
There is no rule to tell you which of the above methods is best for you. The choice you make must be based on what you plan to do with the extra money, how much you'll need, and how quickly you plan to pay it off. Remember These Tips When Using Your Equity: - You can borrow more money by using the equity built up in your home as collateral.
- Compare the costs of a new first mortgage versus a second mortgage on large loans. Usually, a second mortgage will be cheaper up-front, even though it has a higher rate.
- On smaller loans, compare second mortgages, unsecured personal loans, and a line-of-credit mortgage.
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