Ted Stumpf
Ted Stumpf, Windermere Napa Valley PropertiesPhone: (707) 246-9825
Email: [email protected]

Common & alternative ways to get equity out of your home

by Ted Stumpf 04/02/2023

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Paying off credit card balances and consolidating debt are some of the most common ways homeowners use their home equity, but there are plenty of alternative ways to get equity out of your home. 

The longer you make payments on your mortgage, the more your equity grows - giving you more power to use that value to your advantage.

Here are some other great ways you can benefit from building equity:

Cash-out refinance

Cash out refinancing lets you use equity by getting a new mortgage. Essentially, you replace your current mortgage loan with a higher amount, and receive the difference in cash. The cash is tax-free and can be used for anything you need.

Home equity line of credit (HELOC)

A home equity line of credit or HELOC is a second mortgage with a credit amount you can draw from when needed. HELOCs are similar to credit cards in that you only pay for what you actually use until the designated draw period ends.

Home equity loans

A home equity loan is another second mortgage option, complete with a separate monthly payment. These loans often have higher interest rates than your initial mortgage, but use your home's equity as collateral.

Home equity loans & HELOCs are not the same thing

While similarly named, home equity loans and HELOCs function differently. With an equity loan, you get a lump sum of money at the beginning and make payments back over the life of the loan. A HELOC, by contrast, lets you draw whatever amount you need during a fixed period.

The key difference is with a loan, you'll have a regular monthly payment with a locked-in interest rate. With a HELOC, your payments and interest rates can vary.

When to avoid a home equity loan

When is it better to use a HELOC versus a loan? The important difference is flexibility. A HELOC allows you to pay for variable expenses and emergencies, and can be a great benefit for long-term costs like ongoing remodeling or renovation projects.

Consider all details of your financial situation when deciding how to use your home equity. Based on your goals and limitations, you can find the best possible way to benefit from your investment.

About the Author

Ted Stumpf

Ted draws energy and joy from building synergetic relationships with his Clients. Ted's nature is graciously gregarious and persevering; he's honest; and he's been dedicated to a substantial list of clientele throughout his 25 years in the hospitality business and almost two years as a REALTOR. His passion is creating a sincere, successful relationship with people.

Ted grew up in a family of Realtors in central Indiana, earned a degree in economics and philosophy from the University of Notre Dame, and jumped into all aspects of the restaurant business. His ensuing hospitality career path eventually led him into the Event Management Sales & Service role in hotels and quickly guided him to Los Angeles, San Francisco, and finally to a luxury resort in the Napa Valley, where he, his husband, and their dog have resided for almost a decade now.  

The irony is not lost on Ted that his ‘growth’ journey has culminated in“living happily ever after” in an agricultural area with a small-town feel and sense of community strikingly reminiscent of his youth…and as a REALTOR nonetheless!