How to Borrow Money by Cashing Out Home Equity

0
114

Over the years, you have been a faithful steward of your mortgage. But the time may have come when you need to borrow money now for things you need to purchase. A great way to fund your purchases is to cash out the equity in your home with a home equity loan.Money You Need NowA home equity loan uses the built up equity in your home to give you the money you need to buy things like major appliances or electronics, or to build on to your home, adding a room or other addition. You might use it to pay for your next vacation, or to pay for education for yourself or your children. Purchasing an automobile is also a great use for it. Whatever your needs are, your home equity loan can be a great way to find financing.The way that it works is simple. You will be putting the equity in your home up against the money that you borrow. The lender will place a lien against your home until you have paid the loan in full. It is important to remember, however, that if you default or fail to follow the terms of your loan that the lender can foreclose on your home just as the holder of your mortgage can.Borrow Amount Equal to Your EquityThe amount that you are eligible to borrow on your home equity loan is typically equal to or less than the amount that you have built up in home equity. For example, if the total that you have paid thus far on your mortgage is $100,000, you can generally borrow up to $100,000. Borrow only what you need, but borrow as much as you need – homeowners usually are approved for just one equity loan over the course of their mortgage.Huge Tax SavingsHome equity loans are superior to other types of consumer loans because the interest that you pay can be taken as a tax deduction when you file your income taxes each year. This can add up to substantial tax savings over the life of your home equity loan. Remember, however, that if you do not qualify to itemize because you don’t have enough deductions (which means that you always take the standard deduction) then you will not realize this savings each tax year.Further, the tax break limit for claiming home equity loan interest is $100,000. Any amount that you borrow over the $100,000 limit will not be eligible for this credit. The tax savings that you can get on your loan can make the money you borrow end up costing you close to zero percent in interest charges once you have received your deductions!The best place to get your home equity loan is on the Internet. There are many fine online lenders who can get you the money you need from the convenience of your own home. With user-friendly websites and great customer service, these lenders make it easy to get the money you need.