Whether you are seeking extra cash because you are running low on funds, or maybe you want to put the cash back into your home for a construction project, there are several ways to access the equity in your home. Since there are several ways to go about this, we thought an overview would be a good place to start so you have a basis of information before taking the next step.

Cash Out Refinance

In this case, you take out a cash loan for more than your current home loan and get the difference in cash. This new loan will pay the difference between the value of your current home and the mortgage balance. It will typically have a higher interest rate than your current home loan amount, and there is a limit to how much you can actually take out in a cash-out refinance.

It is possible to do a cash out refinance and get a lower interest rate, but that depends on the status of the market. Interest rates vary depending on the housing market so if you happen to have purchased when rates were higher overall, you might be able to get a lower interest rate even with a cash-out refinance.

Second Mortgage

A second mortgage can be taken out once a certain amount of the first mortgage is paid off. If you happen to default on the second mortgage, the original mortgage would be paid out from the property until it is paid off.

The second mortgage only receives payments after the first one has been paid off, the interest rate is typically higher than the first, while the amount borrowed is lower.


The next way to pull equity from your home is a HELOC or home equity line of credit. It is quite a bit different than the other options discussed as they are a revolving source of funds. When using a HELOC, you can access the funds with a credit card or check that is linked to your account.

The good thing about a HELOC is the freedom you have with the money which allows you to use it for an emergency or anything else. But on the other hand, if you end up over spending, it can be trouble much like that of a credit card that gets out of hand. Keep in mind, the funds borrowed do need to be paid back including interest as well.

Reverse Mortgage

The main limit that comes with a reverse mortgage is the age requirement. In order to qualify for a reverse mortgage, you need to be 62 or older and have equity available in the home.

The funds borrowed in a reverse mortgage can be received as a lump sum, monthly payment, or a line of credit, and doesn’t require payments. With a reverse mortgage, the entire loan is due when the owner passes away or sells the home. The loan also must be structured so that it doesn’t exceed the value of the home.

Reach Out Today!

If you are thinking about pulling equity from your home we would love to discuss your options with you and answer any questions you may have. Feel free to reach out to us at North Star Mortgage Network Inc today!