The cost of real estate to buyers has risen dramatically, mainly…
To take equity out of a home, you have a few options, primarily through a cash-out refinance or a home equity loan/line of credit. Title insurance may be involved in both processes, depending on your specific situation and location. Here’s an overview of each option:
A cash-out refinance involves replacing your existing mortgage with a new one that has a higher principal balance, allowing you to receive the difference in cash. Here’s the general process:
a. Assess your home’s value: Get an appraisal to determine the current market value of your home. This will help the lender determine how much equity you have in the property.
b. Check your credit and finances: Lenders will review your credit score, income, and financial situation to assess your eligibility for the refinance.
c. Apply for the refinance: Submit a loan application to the lender of your choice. You’ll need to provide documentation and go through the underwriting process.
d. Closing process: If your application is approved, you’ll go through the closing process, where the new mortgage is finalized, and you receive the cash-out amount.
Title insurance involvement: In a cash-out refinance, title insurance is typically required. The lender will want to ensure that there are no title issues or claims on the property before issuing a new mortgage.
Home Equity Loan or Home Equity Line of Credit (HELOC):
A home equity loan and a HELOC are types of second mortgages that allow you to tap into your home’s equity while keeping your existing mortgage intact. Here’s what you should expect:
a. Home equity loan: You receive a lump sum loan based on your home’s equity, and you repay it with fixed monthly payments over a set term.
b. HELOC: You are given access to a line of credit based on your home’s equity. You can draw from the line of credit as needed during the draw period, and then you repay the amount borrowed with interest.
Title insurance involvement: Title insurance is usually required for home equity loans. Just like in a cash-out refinance, the lender will want to protect their interest in the property and ensure there are no title issues that could affect your ownership. HELOCs do not require as much scrutiny and title insurance is rarely involved, if ever.
Keep in mind that the specific requirements for title insurance and the process may vary depending on your location and the lender you choose. It’s essential to do your due diligence, and seek advice from a reputable accountant to ensure you are making the best decision based on your financial position.
Principle Abstract has years of experience helping homeowners with their title insurance needs. As one of the most respected title insurance agencies in southeast Pennsylvania, you can count on our team to deliver exeptional service with each transaction.
If you are looking to tap into your home’s equity, give our team a call today for a no obligation consultation.