Tapping into My Home's Equity

As you know, a home is likely to be your largest single purchase, and certainly the most emotional one you'll make. It's an accomplishment – a source of pride and a legacy to pass on to future generations. And more than that, your home is also an important investment, which is why it’s always good to know how to tap into that investment if you ever need to do so.

For many, home equity is a convenient way to borrow money. Equity is the amount you would receive after selling a property and paying off the mortgage. You build equity in your home as you make monthly mortgage payments. Your equity also grows as the property value of your home appreciates. Most homeowners will gain more equity this way than through paying down their principal, especially early in the mortgage term.

Although home equity financing may be a very attractive borrowing solution, the decision to borrow using your home as collateral should not be taken lightly.

Borrowing against your home's equity requires you to use your home as collateral. If you fail to make the required payments, you may be putting your home at risk. It’s also important to remember that when you pay off your first mortgage, a home equity loan or any balance on a home equity line of credit moves up in priority and becomes your first lien, with first claim on your property. If you plan on selling your home, most lenders require you to pay off the home equity loan or line of credit outstanding balance at that time, as well.

Your financial advisor and Edward Jones Mortgage can help you evaluate your home equity options. The solution will depend on what you plan to do with the money and how long you need to borrow the funds:

Home Equity Loan Features
Often used for large, one-time purchases or for consolidating debt.

Home Equity Line of Credit Features
For projects that vary in size, scope and cost – or for a rainy day.

Home Equity Loan or Line. Which is Right for Me?
This head-to-head comparison will help you understand the differences.