Loan Types: Equity
There are a few options for drawing on equity in the home. Each option provides flexibility in using the funds for a variety of expenses, but the qualification criteria, loan amounts, and terms vary. Our team can consult with you on your goals and assets to select a program that fits your needs.
Loan Categories
The loan options to draw on equity in the home have different advantages. Some offer more cash out up front, while others offer more time to repay at lower rates. It's important to understand the benefits and risks of each option: the following list provides just a brief overview of some of the key terms you may hear when considering a loan that draws on your home equity.
Home Equity
Two common loan types are a HELOC (Home Equity Line of Credit) and a HELOAN (Home Equity Loan). Each draws on equity in the home to provide the borrower with cash to spend, with different financing and repayment terms. These may be secured independent of other loans.
Cash Out
In a Cash Out Refinance, the borrower has some equity in the home, and is refinancing the loan amount to exceed what they currently owe. The difference in what is owed and the new loan amount allows for a cash withdrawal, which can be put towards other expenses.
Reverse Mortgage
Reverse Mortgages are an option for homeowners above a minimum age threshold - typically near the federal retirement age - who want to draw on equity in their home by providing their home as collateral. This maximizes monthly earning potential, but the loan amount and interest grow over time.