Being a homeowner these days can feel a bit like being “all ranch, no hat.” Even when you pay down your mortgage as fast as you can, finding the ready cash you need for other expenses often seems to be a challenge. However, you can leverage your equity stake in your home by taking out a home equity loan. Home equity loans can be a smart and sustainable way to fund your goals – when borrowed responsibly and spent wisely. Find out empréstimo home equity

A home equity loan, which is also known as a second mortgage or lien, is secured by the home and typically based on the amount you borrow up to 80% of your home’s value. You may be required to have a minimum credit score and debt-to-income ratio (DTI) before receiving the loan, which is similar to how your mortgage was originally approved. Unlike a traditional mortgage, you typically don’t receive the entire home equity loan balance upfront; instead, you repay it in a series of monthly payments over a set term, such as five or 10 years.

What Is a Home Equity Loan? A Complete Beginner’s Guide

Keep in mind, a large home equity loan can have a negative impact on your credit report, increasing the total available credit and dropping your credit score temporarily. It could make it harder to qualify for other types of loans in the near future, such as an auto loan. For this reason, you should be sure to use your home equity loan wisely and only for long-term goals.