Equity is a term used to describe the value available in a home mortgage. When you have a mortgage, you gain equity as you make your monthly payments. Over an extended period of time, you can earn a great deal of equity in your home. The value you have gained can then be used in an equity based mortgage. You can take out a loan based on the equity you have built up in order to complete home projects, consolidate debt, purchase another home and more. At Mortgage Guys, we offer equity based mortgages that can help you in a variety of ways. Consult with our brokers today to see how much equity you have in your home and how it can be used to your benefit!
To begin, you must understand what equity is. Let’s say you purchased a home five years ago for $200,000. Over the past five years you have paid a significant amount towards your mortgage loan and now owe only $150,000. Essentially, you have $50,000 in equity in your home. However, this amount can vary depending on the value of your home. Home values can change over time due to the advancements in the neighborhood, recent home sales, and upgrades to the home, etc. Your home would need to be evaluated to ensure the true value and then the equity determined based on that number.
At Mortgage Guys, we can help you better understand equity and determine the amount you have in your home. An equity based mortgage is considered a second loan, separate from the actual mortgage loan. You can have the option to pay this loan off quicker as the term rate will be shorter than a traditional 30-year fixed rate mortgage loan.
Using Your Equity
There are many ways to use the equity of your current home. You can choose to consolidate debt and take the money from the equity loan and pay off all credit cards or other debts. You may also choose to use the money to complete updates needed to the home such as a new roof or flooring, even an addition. The choice is yours, with the money coming in handy for whatever you need!
The process of obtaining an equity home mortgage is similar to a standard mortgage. You will need to be pre-qualified and the home evaluated to see just how much equity you have available. Based on certain factors such as your income, debt ratio and credit score, you will be given an interest rate and term for the loan. Once all the factors have been considered and the home evaluated, our brokers will be able to provide you with the information you need to make a decision including terms and monthly mortgage payment.
Once you have made a decision that you want to take out the equity mortgage, the brokers at Mortgage Guys will work hard to find you the best rates possible to ensure you are able to afford the new mortgage and complete whatever tasks you have planned. Contact our brokers today to find out more about the many financial options we can provide you by using the equity of your existing home.