How to Get Equity Out of Your Home Without Selling

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Home equity is a form of savings built up over many years of making mortgage payments, paying property taxes and insurance, and maintaining your home. It can often be advantageous to convert home equity into cash to pay off debt, do home improvements, etc. We’ll explain the ways you can potentially get equity out of your home without selling it.

Home Equity Loan

A home equity loan is a type of mortgage that enables homeowners to borrow against their home equity with a fixed interest rate and payment.

A home equity loan offers an up front lump sum of money that can be used for a variety of purposes, including home renovations, debt consolidation, or major purchases.

The loan is secured by the equity in your home, which is the difference between your home’s current market value and the amount you owe on any existing mortgages.

One of the main advantages of a fixed-rate home equity loan is the predictability it offers. Since the interest rate remains fixed throughout the loan term, you can more easily budget and plan your finances.

Home equity loans often come with longer repayment terms and lower monthly payments than other types of loans (such as personal loans). This helps make your monthly payments more manageable and affordable.

It’s important to note that, like any mortgage, a home equity loan has risks. If you’re unable to keep up with your payments, you could face foreclosure.

Home Equity Line of Credit (HELOC)

A home equity line of credit (HELOC) is a flexible borrowing option that allows you to access the equity in your home on a revolving basis.

Unlike a fixed-rate home equity loan, a home equity line of credit (HELOC) is structured as a revolving line of credit like a credit card. You’re approved for a certain credit limit based on the equity in your home and you can borrow up to this credit limit at your discretion.

Interest rates on HELOCs are typically variable, meaning they fluctuate over time. If interest rates increase, your payment could increase as well.

HELOC payments are typically interest-only during the draw period, which is usually the first ten years of the loan.

After the draw period ends, a repayment period begins. Your payment will be recalculated to repay the entire loan amount over the remaining loan term. This could potentially make your payment increase substantially if your HELOC has a large balance.

Like any home loan, a HELOC comes with risks. If you’re unable to make your payments, you could potentially lose your home.

It’s crucial to understand how a HELOC works and consider how you plan to use it before signing on the dotted line.

Cash Out Refinance

A cash-out refinance enables you to borrow more than your existing mortgage balance and receive the difference in cash.

You can use the proceeds for whatever you like, including debt consolidation, home improvements, paying medical bills, or making a large purchase.

You don’t need to have an existing mortgage to do a cash-out “refinance”. The process and qualifications are largely the same even if your home is free and clear.

Most lenders will lend up to 80% of your home’s value on a cash-out refinance. If you’re a veteran, you can often borrow up to 90% or 100% of your home’s value with a VA-backed loan.

One of the advantages of a cash-out refinance is that you can potentially get a lower interest rate than what other mortgage products offer.

You can also stretch the loan term out to as long as thirty years, which keeps your payments very low.

A cash out refinance is a great option, but it’s important to think through the risks. When you increase your loan amount, you’re potentially extending the time it takes to pay it off.

If the value of your home decreases, you could potentially owe more than your home is worth.

Reverse Mortgage

If you’re over the age of 62, a reverse mortgage could be a good option as well. A reverse mortgage enables you to convert home equity into cash without a mortgage payment or giving up ownership of your home.

The most popular reverse mortgage in the United States today is the FHA-insured home equity conversion mortgage, or HECM (often pronounced heck-um by industry insiders). If somebody you know recently got a reverse mortgage, it’s likely they got a HECM.

No mortgage payments are required as long as at least one borrower (or non-borrowing spouse) lives in the home and pays the required property charges.

You always remain the owner of your home and you’re free to leave it to your heirs. Your heirs will inherit any equity remaining in the home whether they choose to keep it or sell it.

The HECM is a non recourse loan, which means the most that will ever have to be repaid is the value of the home. FHA covers the shortage if your home isn’t worth enough to pay off the entire loan balance.

The HECM is highly versatile and can be tailored to your financial goals and needs. Proceeds can be received in the form of a lump sum, line of credit, term or tenure income, or some combination of all of these options.

Seniors commonly use a reverse mortgage to get rid of existing mortgage payments, pay off other debts, finance home improvements, or supplement existing retirement income or assets.

Home Equity Agreement

A home equity agreement is a type of home equity product that enables you to borrow from your home equity with no mortgage payment and zero interest – even if you have low credit scores or limited income.

Home equity agreements can be structured in a variety of ways, but here’s how they generally work:

  • You receive a large lump sum of cash based on the equity in your home. You can use the cash for whatever you like.
  • No monthly payments are required and no interest is charged. This is a big advantage over a traditional cash out refinance, home equity loan, or HELOC.

In exchange for the lump sum, you agree to repay the lender a percentage of the value of your home at a future date, such as when you sell the home, the last borrower passes away, or the contract term ends.

  • You remain the owner of your home, which means you’ll continue to pay your property taxes, homeowner’s insurance, and existing mortgage payments and HOA dues (if applicable).
  • Flexible income requirements. Because there are no monthly payments, the income requirements are more flexible than a regular mortgage.
  • You may qualify even if you have bad credit. Minimum credit scores are usually around 500.
  • Keep your existing mortgage. You may be able to qualify with and keep your existing mortgage.
  • No age minimums. A home equity agreement could be a good option for homeowners who are too young to qualify for a reverse mortgage. The minimum qualifying age for a reverse mortgage is typically 62, but there are no age minimums for a home equity agreement.

Home equity agreements aren’t available in all states. Click the button below to find out if you’re eligible with Unlock, a leading provider.

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Mike Roberts
About Mike Roberts

Mike Roberts is the founder of, a published author, and a highly experienced veteran of the mortgage industry. When he's not working, he enjoys spending time with his family, skiing, camping, traveling, or reading a good book. Roberts is the author of The Reverse Mortgage Revealed: An Industry Insider’s Guide to the Reverse Mortgage, which is available on Amazon.

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