How to Take Cash Out of Your Home

Equity occurs when your home’s value is greater than the amount left on your mortgage. When you access your equity, you take cash out of your home that you’ve worked hard to build so this should only be done for important reasons. This money can be used for a variety of purposes, such as helping you invest in your home’s future, through home improvement projects. 

Here are a few ways to take cash out of your home.

Cash-Out Refinance

Refinancing your home is an easy way to take cash out. When you refinance, the new mortgage will be greater than your current mortgage balance, but you’ll get to keep the difference, after paying closing costs. The best time to employ this method is when you can also reduce your interest rate. In some cases, you may increase your balance, but the monthly payment actually goes down due to a lower rate. When rates are higher than your current rate, this option is not as advisable.

Home Equity Loan

If you don’t want to mess with your current mortgage, you can take out a home equity loan or a home equity line of credit (HELOC). Each of these is a second mortgage taken out on your home that allows you to access equity. Once a home equity loan closes, you’ll receive the payout. When a HELOC closes, you can access it whenever you want, making this a great option for someone who isn’t quite sure when the money will be needed. Home equity loans can be a fixed or adjustable rate loan and usually has a shorter term than a traditional mortgage. It allows you to access exactly what you want without refinancing, and it has substantially lower closing costs. 

Reverse Mortgage

If your mortgage is paid off or has a low balance, a reverse mortgage might be right for you. You access your home equity by receiving a lump sum or electing to receive a set amount every month. It is exactly as the name implies… reverse. The lender pays you! You won’t have to ever make a monthly payment. The mortgage balance will increase over time, and it’ll be paid off when the property is sold or refinanced. For seniors, it can be a smart way to take out cash while continuing to own, and stay in your home.

Finance Your Home with Butler Mortgage

Butler Mortgage is here to help get you in a home so you can start building equity. For more than 25 years, we’ve been helping home buyers in Florida, and now Georgia, find the right loan solution and secure rates that fit their needs. Get started today by calling 407-931-3800 or filling out our free consultation form online.