How a Home Equity Loan Can Help You Pay Off Your Mortgage

At one point in time, it was finally the right time to buy a new home. And when you bought that home, you likely took out a mortgage. Now, you’re looking to refinance and considering a home equity loan. But what is a home equity loan, and what makes it different than a standard home loan? If you haven’t finished paying down your mortgage, it could help you save some cash on your path towards becoming a debt-free homeowner. DEXSTA is here to help you out. 

Home Equity Loans 101

If you’re not in the 40% of homes that are free of a mortgage, you may want to consider a home equity loan. Essentially, it’s like setting up a second mortgage. But taking out a second mortgage only makes sense if your home has built some equity, which is the portion you legally own of your home. It also refers to the value gained in your home. That means if you bought your home for $300,000, but now it’s worth $400,000, you can use the $100,000 difference in assets against your home. Or if you opened up a $400,000 mortgage on your home but have already paid off $100,000, then a home equity loan could help you pay your original mortgage back before interest starts to accrue.

Benefits of a Home Equity Loan

Tax-deductible 

One benefit of a home equity loan is that it allows you to claim a tax deduction for the paid interest. But only if the money from the loan substantially improves your home through a renovation or new build. Once a taxpayer qualifies for these benefits, they can deduct interest on up to $750,000 of qualified mortgages. 

Lower interest

With DEXSTA’s lower rates, you’ll also pay less interest over the time of your home equity loan than you would on a standard personal loan. The lower interest rates are a huge benefit and will save you money in the long run. 

Flexible terms

Your repayment term for home equity loans can range anywhere from 5-15 years, depending on how much you wish to pay monthly. The chosen timeline will also determine your set interest rate, which can range anywhere from 3-5%. Whichever options you accept, DEXSTA offers a path that will help you reach financial freedom.

Do You Qualify for a Home Equity Loan?

First, you should assess how much equity your home has accrued since you bought it. Or determine how much you owe since you took out a mortgage. Online evaluation tools like Zillow can be a great place to start. Either the value of your home has increased since the day you bought it, or you may have already paid off a substantial amount. 

Check-In With DEXSTA

Whichever position you find yourself in, DEXSTA is available for a real conversation. So, let’s discuss what refinancing your home could look like for you. Contact DEXSTA today.