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Money Smart: 5 ways to get equity out of your home

A big benefit of being a homeowner is that you can tap into your home equity to pay for other things. Here are the ways to pull equity from your property.


#1 Sell 

"The first thing you could do is sell your home. Now you could obviously go rent something else. Number two, you could buy a cheaper home and use the difference of the home price and keep that cash flow for your daily expenses," said Karl Eggerss, senior wealth advisor and partner of Covenant.

#2 Cash-out Refinance

"We all know about re-financing with interest rates as low as they are. But during that process, you could actually pull equity out of your home. In other words, when you get that new loan, you wouldn’t put as much down on the new home and keep some of that cash in your pocket," he explained.

#3 Home Equity Loan

"Usually when people have some type of remodeling or some project, they will get a home equity loan. They literally use the equity in their home for some purpose. There are some restrictions around that. But that kind of leads into a home equity line of credit," said Eggerss. 

#4 Home Equity Line of Credit

"Home equity line of credit is a little bit more flexible than a home equity loan because there aren’t any stipulations. You simply go and you get this line of credit – that’s open. It’s almost like a credit card that you could use whenever you wish. It’s just using that equity in your home for that collateral for the credit," explained Eggerss.

#5 Reverse Mortgage 

"Reverse mortgages have a really bad reputation. However, a lot of the rules have changed in the face of the consumers since, the great financial crisis of 2008-2009," said Eggerss. "There are circumstances where reverse mortgages can be a good idea. If somebody knows they want to stay in that home and they want to use that equity and actually pay them a monthly amount to live off of, a reverse mortgage is something to definitely consider."

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