Take Out A Home Equity Loan

Category: Finance, Real Estate.

So you want to get involved in real estate investing, but you just don t have any extra money to get started?

If you own your own home, you can leverage this asset and be well on your way in no time. This is a common situation, but what most people don t realize, is that you may already have enough resources to get started. Unless you purchased your home with an interest- only loan, you are building equity each time you make a mortgage payment. If you have any other loans attached to your home, subtract them as, or other liabilities well. To figure out how much equity you have in your home, subtract the balance on your mortgage, from the value of your home. Most people are surprised to learn how much equity they actually have. There are several ways to use the equity in your home to raise cash for real estate investing.

In many cases, it s more than enough for a down payment and improvements on your investment property. Here are the basics: Refinance Your House. Your current lender may have rules about cash- out refinancing, so check with your mortgage advisor before you begin the process. You can refinance your home in order to get an improved interest rate, but you can also get a cash- out refinance mortgage, and use the cash to purchase an investment property, or you should have least enough for a down payment. Keep in mind, a cash- out refinance mortgage can have higher interest rates than other mortgages. A home equity loan is a loan using the equity in your home as collateral, and is separate from your mortgage. Take Out a Home Equity Loan.

The amount is of the loan is based on a percentage of the equity in your home, you may be able to borrow 90% or more of your homes value. The advantages of a home equity loan the option to pay the loan back early without penalty, and you may choose to pay off those high interest credit cards. Less if you are taking out a home equity loan on a second property that you do not occupy. Open a Home Equity Line of Credit. Like a home equity loan, the amount of the limit is based on your credit worthiness and the equity in your home. A home equity line of credit has a credit limit just like a credit card. You can transfer funds from your home equity line of credit, or even write checks directly from the account.

Another advantage is you are only paying interest and making payments on the amount you owe, not the entire amount of the loan. Interest rates are generally lower than cash- out refinance mortgages, and there are tax advantages as well. You may also be able to renegotiate in the future for a higher credit line when the equity in your home increases, especially if you have made above- minimum payments on timely basis, or home improvements. The average homeowner can become a real estate investor even without a lot of money in your bank account. Investing in real estate is not only for the rich. You can use cash- out refinance mortgages, and home equity, home equity loans lines of credit to purchase your first investment property, and many more properties to come.