Equity, equity where art thou, equity?

"The kitchen needs to be updated." "We need to build an additional room." "My roof needs to be replaced." "I have too much credit card debt." These are just a few of the comments I hear when a client wants more information on how they can access the equity in their home to make updates or pay off existing debt.

Here are just a few of the options that Nations Lending currently can offer to help a client achieve their goal:

One option is to consider a cash-out refinance. While there are differing opinions on doing a cash-out refinance with current interest rates, it may be to your advantage to have a higher interest rate if it helps you add that room or relieves the stress of overwhelming debt.

A "blended rate" is the weighted average interest rate on consumer and personal loans that combines the interest rates of multiple existing loans and any new loans obtained through refinancing. Here's when it could make sense for you to get a blended rate and when it may not. Let me explain by showing you a blended rate calculator.

A second option could be a home equity line of credit, or HELOC/HELOAN, which is a second mortgage that gives you access to cash based on the value of your home. You borrow against your equity, which is the home's value minus the amount you owe on the primary mortgage, if any. You can usually borrow up to 90% of your equity, though this varies by lender.

HELOCs have adjustable interest rates. This means that as baseline interest rates go up or down, the interest rate on your HELOC will adjust, too. However, because a HELOC is secured against the value of your home, the interest is typically lower than the rate you'd pay on a credit card or personal loan, and closer to a mortgage rate.

You typically have 10 years to withdraw cash from a home equity line of credit, while paying back only interest, and then 20 more years to pay back your principal plus interest at a variable interest rate.

HELOAN allows you to borrow money by using your home as collateral. A HELOAN is sometimes called a second mortgage as you can use the equity in your home – the value of your home less your mortgage amount – to borrow money. A HELOAN may be a better fit for you if you have fixed costs and you prefer the stability of a long-term, fixed monthly payment. Since HELOANs provide a one-time lump sum of money, this type of loan may be better for a larger, one-time expense home improvement or debt consolidation. With a HELOAN, you'll also have the benefit of a spending cap already in place, and you'll know exactly how much the monthly payment will be.

We know that one size doesn't fit all, and this is why we offer a wide variety of loans for your unique situation. Let us help guide you through the process and provide you with the knowledge to make informed decisions for your future.

Laura Johnson has lived in Tehachapi for 49 years and her family's history in Tehachapi spans over 150 years. Laura has been in lending for 14 years and the real estate industry for 24 years. You can reach Laura at Nations Lending 1054-B Valley Blvd. Tehachapi, (661) 303-7853 or you can reach Jeff Lamonte at (805) 794-0444.