An equity take-out refinance replaces your current mortgage with a new mortgage and funds paid out to you at closing. A Home Equity Loan stands alone from your current mortgage. Clients choose to take second mortgages when they are already in a strong position with their first mortgage but still have a need to access equity.
Equity is the value of your home, less any mortgages against it. You can typically utilize up to 80% of what your home is worth. If you are currently paying higher interest rate debts, it may be worth it to consider taking some equity out as part of your next mortgage loan refinance to pay these off.
Lenders are limited to loaning 80% of your home’s appraised value. There may be other factors to consider when deciding on how much to borrow, so consult with a Sunlite Mortgage Professional today to make sure you are in the best spot you can be.
With any refinance there are typically some costs accrued in the process of closing your loan, between lender costs and third-party service providers, like appraisers and attorneys. When considering and equity take-out refinance, most clients choose to include any costs with their new mortgage balance, rather than paying for them separately.
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