Laser Focus World is an industry bedrock—first published in 1965 and still going strong. We publish original articles about cutting-edge advances in lasers, optics, photonics, sensors, and quantum technologies, as well as test and measurement, and the shift currently underway to usher in the photonic integrated circuits, optical interconnects, and copackaged electronics and photonics to deliver the speed and efficiency essential for data centers of the future.

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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Can You Use Equity in Your Home to Pay Off Debt?

Sponsored Content: If you have outstanding debts, you might be able to use your home equity to pay them off.

As an example, say your primary mortgage balance is $200,000, and your home is valued at $300,000. That means you have $100,000 worth of equity in your home.

There are three common ways to tap into that home equity if you need it.

1.    Home Equity Loan

A home equity loan is a second mortgage on your home. When you take out a home equity loan, you receive a lump sum of money upfront. You repay it in monthly installments with a fixed interest rate over a fixed period of time.

Because your new lender is taking on added risk, home equity loan interest rates are often higher than primary mortgage rates, although they are usually lower than personal loans or credit cards.

Taking out a second mortgage means you may have to pay closing costs. But some lenders like Discover®don’t charge any costs when closing a home equity loan.

2.    HELOC

A home equity line of credit (HELOC) gives access to your equity as needed, and you repay only what you borrow.

HELOCs often have variable interest rates since you’re withdrawing money over time. Borrowers usually have a fixed draw period (ex. 10 or 20 years) to access that money and make interest-only payments. Then, the HELOC is closed and the outstanding balance is paid back as a loan over another set period of time.

While HELOCs commonly come without closing costs, they may require appraisal fees and annual account fees for the open line of credit.

3.    Cash-Out Refinance

Cash-out refinancing replaces your original mortgage with a new mortgage for more than the amount you currently owe, and you can receive the difference in cash.

Since this is a new mortgage, you’ll typically have to pay closing costs and lock in a new interest rate. Some lenders, like Discover, don’t charge any costs at closing .

Using Home Equity to Pay Off Debt

Home equity loans, HELOCs, and cash-out refinances are all options that come with their own benefits. The solution you choose should ultimately depend on your financial needs and the amount of equity you have.

Contact Information:

Name: Michael Bertini
Email: michael.bertini@iquanti.com
Job Title: Consultant

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