home equity

Home Equity

Do you need to free up funds to pay for a larger expense or consolidate debt? With Greater Nevada Mortgage, you can leverage your home’s equity (what your home is worth minus what you still owe) to access a home equity line of credit (HELOC) with rates as low as 8.50% APR1 that you can tap into whenever needed, or explore options for a cash out refinance.

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what is home equity

What is Home Equity, and How Can You Use it?

So, what is home equity, after all? It’s a fairly simple concept that refers to the current market value of your home, minus what you owe. For example, if you had a loan on a $500,000 home and you have already paid $200,000 on it, and assuming your home’s value stayed the same, then the amount of equity you have would be $200,000. Your equity may grow over time as you continue to make payments against your home loan and the value of your home increases or decreases. Any gains you make come from paying down the balance of your loan over time or as the home’s value increases. 

As a homeowner, you can leverage your home’s equity to secure a home equity line of credit (HELOC) that allows you to borrow against available equity, using your home as collateral. In one sense, HELOCs work like credit cards in that you can continually borrow up to an approved limit while paying off the balance. Not so complicated when you think about it!

4 Ways to Leverage Your Home Equity

A home equity line of credit can be used for everything from home renovations to grad school and other personal expenses. Here are several common uses. 

  • 1. Home Improvements

    One of the most popular reasons to take out a home equity line of credit on your property is to make improvements to your home. Looking to remodel your kitchen? Adding a “catio” for your furry friends? Whatever improvements you want to make, a HELOC is an excellent way to do so.

  • 2. Debt Consolidation

    If you’re facing the prospect of paying off large sums of debt, there may be a better way. Tapping into your home’s equity to repay outstanding debt can be an efficient and lower cost method of ridding yourself of credit card and other high-interest debt balances.

  • 3. Education

    Career changes can be a terrific way to increase your household income and maximize your potential. If you’re considering going back to school to learn new skills, a home equity line of credit can be used to fund your studies.

  • 4. Emergency Expenses

    Life happens. Be it a medical emergency or the need to fly across the country to take care of a loved one, it’s always prudent to have funds available to deal with all the curveballs life can throw. A home equity line of credit can help. 

 Options for Borrowing Against Home Equity

Homeowners have a whole array of options when it comes to borrowing against the equity in their home. From home equity lines of credit to cash out refinance loans, here are a few of our clients’ favorite equity-based home loans

How Do You Pull Equity Out of Your House?

Greater Nevada Mortgage has a solution for all stages of home ownership. For many, that means leveraging equity in their homes to successfully finance their dreams, whether that’s paying for home improvements or a  remodel, funding education, or affording a dream vacation. A Home Equity Line of Credit or cash out refinance are two common paths to do so. Here’s how to get started. 

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Common Questions About Home Equity

  • What is the difference between a HELOC and a home equity loan?

    The terms home equity line of credit (HELOC) and home equity loan are sometimes used interchangeably, but there are actually a few key differences homeowners should be aware of. A home equity loan is based on a lump sum built around a fixed rate, fixed term and fixed payment amount. With this type of loan, you’ll begin payments immediately and your monthly payment doesn’t change. It’s important to note that a home equity loan is considered a second mortgage and adds a second monthly payment independent from the first.  

    A HELOC, on the other hand, is an adjustable rate line of credit tied to the prime interest rate and may include an additional margin. Whenever prime changes, your HELOC payment may also change. However, with a HELOC, you take money out as you go, and only make payments on the balance. In other words, if you don’t have a balance, you won’t be making payments. 

    Greater Nevada Mortgage does not currently offer home equity loans, but we do offer a HELOC option for our clients. 

  • Do I qualify for a HELOC?

    For a homeowner to qualify for a HELOC through Greater Nevada Mortgage, you must be able to  qualify for membership in the Greater Nevada Credit Union (GNCU) which is open to anyone living or working in Nevada’s 17 counties, and members of their immediate family. New applicants can join GNCU without having previously been a member, and a property in California may qualify if the homeowner is eligible for membership.

    Other qualifications include: 

    • You must be looking to obtain a HELOC on your primary residence,  not an investment property.
    • You must have at least 20% equity in your primary home.
  • How much equity do I have in my home?

    It’s pretty easy to figure out your home’s equity. Get an estimate of your home’s value (from websites such as Redfin and Zillow) and subtract the amount left on your mortgage. To increase the equity in your home, follow these steps: 

    • Make a large down payment when purchasing  
    • Focus on paying off your mortgage faster than the repayment schedule
    • Consistently pay more than the minimum
    • Renovate as needed
  • Is it a good idea to use my home’s equity?

    Home equity lines of credit are not for everyone, but many homeowners find benefit in being able to tap into their home’s value to fund all sorts of expenses. From college and postgraduate education to home renovations to emergency funds, HELOCs are an affordable way to free up cash for many people. 

    Think of it this way: if an emergency arises, wouldn’t you want to have an established line of credit you can pull from any time, rather than scramble to put enough money together? Another advantage: your HELOC payment is tied to the balance you use. If you don’t need to borrow any money against your home, you will not have any payments. Win-win, we say. 

  • Does a HELOC hurt your credit?

    Any time you borrow money, it will impact your credit score. When you first apply, our team does what we call a “hard pull” on your credit to ensure that you can repay over time. This may or may not impact your credit score depending on many other factors within your credit history. Having a large loan balance on your HELOC could also impact your available credit. 

1APR = Annual Percentage Rate. The APR can vary and is based on the Prime Rate plus a margin of 0.00% to 1.50% based on borrower credit rating and other qualifications. The APR is subject to change each month, based on changes to the highest Prime Rate published in the Wall Street Journal “Money Rates” table. Minimum APR is the Prime Rate, maximum APR 18%. Up to 80% CLTV available with credit lines from $25,000 to $250,000 subject to collateral type and borrower qualifications. Fees and closing costs to establish a HELOC generally total between $0 – $1,500 and are paid by the borrower. $75 annual fee beginning on the first anniversary date. $500 pre-payment penalty if the HELOC is closed within 36 months of origination. Rates, terms and conditions are effective as of July 27, 2023, and are subject to change without notice. Loans are available for 1-2 unit, owner-occupied properties in the state of Nevada only. Greater Nevada Credit Union membership is required prior to loan funding. Additional terms and conditions may apply. The interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for Federal income tax purposes. Borrower should consult a tax adviser for further information regarding the deductibility of interest and charges. This is not a credit decision or a commitment to lend. We do business in accordance with the Federal Fair Housing Law and the Equal Opportunity Act, and the California Fair Employment and Housing Act.