Ways to Tap Home Equity | Chris Hovenier

Your home may be the largest asset you own, and there are several different ways to borrow against it. They are not interchangeable: each one is built for a different kind of homeowner and a different goal. This guide compares the four options Christopher helps homeowners with most often, so you can see which direction fits before you pick up the phone.

Christopher Hovenier is licensed in Arizona, California, Colorado, Florida, Idaho, Michigan, New Mexico, Tennessee, Texas and Virginia. Whichever option you are leaning toward, he will compare it against the others for your home and tell you plainly if something else fits better.

The Four Options at a Glance

Reverse Mortgage (HECM)

For homeowners 62 and older who live in the home as their primary residence. It converts part of your equity into funds without a required monthly mortgage payment. You still pay property taxes, insurance and upkeep, and the balance is repaid when the last borrower sells, permanently moves out, or passes away.

Cash-Out Refinance

Replaces your current mortgage with a new, larger one and pays you the difference in cash. One loan, one payment, but a new rate and term and a bigger balance.

HELOC (Home Equity Line of Credit)

A revolving line of credit added on top of your existing mortgage. You draw what you need, when you need it, and typically pay interest only on what you have used. Rates are usually variable.

Home Equity Loan (HELOAN)

A fixed, one-time loan added on top of your existing mortgage, repaid in equal installments. Predictable payments, no further borrowing after closing.

How They Compare

Keeps your current first mortgage: HELOC and home equity loan. A cash-out refinance replaces it, and a reverse mortgage pays it off.
Lump sum vs. flexible access: Cash-out refinance and home equity loan pay a lump sum. A HELOC offers flexible draws, and a reverse mortgage can be taken as a lump sum, line of credit, monthly payments, or a combination.
Fixed vs. variable payments: Cash-out refinance and home equity loan are typically fixed. HELOCs are typically variable.
Monthly mortgage payment required: Yes for the first three. Not for a reverse mortgage, though taxes, insurance and maintenance remain your responsibility.
Age requirement: Only the reverse mortgage, which requires the youngest borrower to be at least 62.

How to Think About Choosing

Do you love your current mortgage rate? A HELOC or home equity loan lets you keep it. Replacing it with a cash-out refinance gives it up.
Do you know the exact amount you need? A lump sum (cash-out refinance or home equity loan) fits a known cost. A HELOC fits costs that arrive over time.
Are you 62 or older and trying to ease monthly cash flow? A reverse mortgage may be worth a conversation, along with the obligations that come with it.
Are you worried about a variable payment? Prefer a fixed option and plan for the rate on a HELOC to rise.
Is the money for paying off debt? Read the risks in our guide on using home equity for debt consolidation first.

Costs and Risks Common to All of Them

Every option here is secured by your home. That is why the rates are often lower than unsecured borrowing, and it is also why falling behind can put your home at risk. All of them involve costs, such as appraisal, title and settlement charges and lender fees, that vary by product and state. Look at the total cost over the time you expect to hold the loan, not only the monthly payment. Christopher will give you a Loan Estimate that shows the numbers so you can compare in writing.

Where We Help

Christopher helps homeowners in Arizona, California, Colorado, Florida, Idaho, Michigan, New Mexico, Tennessee, Texas, and Virginia. Availability, terms and eligibility vary by state, property and borrower.

Frequently Asked Questions

What are the main ways to tap my home equity?

The four common options are a reverse mortgage for homeowners 62 and older, a cash-out refinance that replaces your mortgage, a home equity line of credit (HELOC) for flexible borrowing, and a home equity loan (HELOAN) for a fixed lump sum. Each has different costs, payment structures and risks.

Which option is best for me?

There is no single best choice. It depends on your age, your current mortgage rate, how much you need, whether you need it all at once, and how comfortable you are with a variable payment. Christopher compares them for your specific situation.

Which options let me keep my current first mortgage?

A HELOC and a home equity loan are added on top of your current mortgage, so your first mortgage stays in place. A cash-out refinance replaces it. A reverse mortgage pays off your existing mortgage with part of the proceeds.

Is there an option with no monthly mortgage payment?

A reverse mortgage for homeowners 62 and older does not require a monthly mortgage payment, but you must keep paying property taxes, insurance and maintenance, and the loan balance grows over time. It is repaid when the last borrower sells, moves out permanently, or passes away.

Are these options right for paying off credit card debt?

They can lower your interest cost, but they turn unsecured debt into debt secured by your home. Read our guide to using home equity to pay off debt, and consider nonprofit credit counseling as an alternative before you decide.

What states do you serve?

Christopher is licensed in Arizona, California, Colorado, Florida, Idaho, Michigan, New Mexico, Tennessee, Texas and Virginia. Availability varies by state and property.

Home equity products are secured by your home. If you cannot repay the loan, you could lose your home. Availability, terms and eligibility vary by state, property and borrower, and all loans are subject to credit and underwriting approval. This is not a commitment to lend. Christopher Hovenier, NMLS #1404324, E Mortgage Capital, Inc. NMLS #1416824.

Ways to Tap Your Home Equity — Compare Your Options