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Home Equity

The Basics: Cash-Out Refinances vs. Home Equity Loans

As a homeowner, you have two powerful tools thanks to all the equity you may have in your property: cash-out refinances and home equity loans. Understanding the nuances of each can empower you to make informed financial decisions and maximize the potential of your home's equity.  

Home equity is a homeowner's interest in their property, representing the portion of the home's value that they own outright. It's calculated by subtracting the outstanding mortgage balance from the home's current market value. As you repay your mortgage or as your home appreciates, your equity grows, becoming a valuable resource for financing major expenses, investments or even debt consolidation. 

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What is a Home Equity Loan?

Not even a year ago, you could refinance your entire mortgage to get cash out of your home’s equity while taking advantage of record low rates. The market is changing and rates are rising, but you still have options to make your home work for you. Home equity loans, also known as second mortgages, are a potential tool that can help you access some of your home’s equity, keep the rate on your existent mortgage, and still achieve your financial goals.

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