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Home equity is a valuablefinancial resource.
By definition, its the difference between your homes value and how much you owe on your mortgage.
If you qualify, you might borrow against that equity to access cash.
Three common avenues for doing so arereverse mortgages, home equity loans and cash-out refinancing.
What Is a Reverse Mortgage?
A reverse mortgage is a loan for older homeowners who have significant amounts of equity.
You may be eligible if youre 62 or older.
The loan doesnt have to be repaid until you sell your home or die.
However, interest accumulates every month.
Youre also still responsible for any taxes and insurance on your property.
A home equity loan lets you borrow against a set amount of your equity.
Unlike a reverse mortgage, home equity lending has no age limit.
Most home equity loans have fixed interest rates, meaning they dont change based on the prevailing market rates.
you could jump into the money at any time during the borrowing period, also called the draw period.
Many HELOC agreements make you pay interest only until the draw period closes and the repayment period begins.
Mortgage refinancing entails opening a new loan that replaces your original mortgage.
Advantages of Refinancing
There are a few ways refinancing can improve your financial situation.
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