Home Equity: Everything You Need to Know
If you’re not entirely sure what home equity is, here is the simplest way of breaking it down: it is the amount of your home that you actually own.
Your home equity will increase over time because as you continue to pay off your loan, you will own more and more of it. It will also build over time due to other factors, including the rise of the market value of the house as well as any renovations and upgrades that you make to your home.
The next step is understanding what your home equity can be used for. You can borrow against your equity amount and use the money you receive for a number of different purposes, including home repairs and paying off debt. There are no rules that specify what the money can be used for, which is why it is a popular and appealing option for a lot of borrowers who will use it for whatever reason they need the money for.
If you are interested in using your home equity, there are different types of home equity products you can consider. The first is a home equity loan that would allow you to borrow a fixed amount of money that you would receive all at once. A second option would be a home equity line of credit, referred to as HELOC, which would allow you to borrow money over a certain period of time as you need it and up to your credit limit. It works like a credit card in that your credit revolves so you could borrow whatever amount you require within your specified limit and when you pay back a portion of what you borrowed, your remaining credit will increase. These are the two most common types of home equity products and a mortgage specialist can provide you with more details.
The reason many people turn to a home equity product is that they are a lot easier to get when compared to a traditional loan. Another benefit is that they normally have a lower interest rate, which is, of course, a lot more appealing. An approval is not guaranteed when you apply for it but because your house is going to be used as collateral you would have an increased chance of obtaining the money you need because you would be considered a low-risk client.
Collin Bruce can help answer any additional questions you may have and provide detailed information if you are a first time home buyer. If you need a mortgage broker in the Edmonton area and want the option of no down payment, they can help with that too. For a reliable mortgage company, you can trust, give Collin Bruce a call today!