Home Equity Provides Financial Resource

By Karen Lawson
Local Lender Columnist
Mar 28, 2007
If you've owned a home in California over the last several years, you may have acquired a significant amount of home equity. Although you can quickly access home equity through refinancing and equity loans and lines of credit, it's a good idea to thoroughly review your present financial situation, and your goals. If you're carrying high interest consumer debt, you may be able to eliminate the debt through a home equity loan, or refinancing your mortgage to cover the amount needed to pay off your loan. Refinancing can be particularly attractive if you have an adjustable rate mortgage and want to convert to a fixed rate mortgage.

How Much Home Equity Do I Have?

In general terms, home equity is the amount of your home's present value less the amount you owe on your mortgage and any secondary financing such as equity loans. When you apply for refinancing or an equity loan, your lender will request an appraisal to establish how much you can borrow. Home equity can fluctuate according to regional real estate markets, so it can vary over time. You'll want to keep a good cushion of equity to help ensure your financial security.

Getting the Best Deal on Home Equity Financing

Depending on how you want to use your home equity, your lender can suggest a number of options. It's a good idea to pay attention to the APR, or annual percentage rate, offered for each type of loan you're considering. This amount represents how much you will pay for interest, costs and fees. Comparing mortgage products can help you find a home equity solution that best matches your needs.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds a Master's degree in English from the University of Nevada, Reno.