If you’re sitting on substantial home equity (as so many of today’s homeowners are), you might be wondering how to access the cash value that’s currently tied up in your home.
There are many reasons to tap your home equity, including:
Paying medical bills,
Covering education expenses,
Financing home renovation projects,
Building an ADU on your property for passive income, or
Buying a new home or investment property.
Whatever your reason, you have value sitting in your home equity; you just need to access it. And we’re going to give you five ways to get cash out of your house without selling.
Why Not Sell?
In many cases, selling is the best course of action. You can sell the property, pay off any reminding mortgage balance, and collect your proceeds to spend as you like. But the expert real estate advisors here at Sequoia Real Estate realize that some homeowners simply aren’t ready to sell. Maybe you have dreams of raising your family in the home or spending your retirement there.
We respect that choice, so we want to give you options for cashing in on your home when you’re not ready to sell.
5 Ways to Get Cash Out of Your House Without Selling
Here are the top five ways to cash in on your home equity without selling.
1. HELOC
A HELOC (Home Equity Line of Credit) is a revolving credit line that you can use as needed. Similar to a credit card, you get approved for a maximum limit, and you can borrow against that limit and pay it off in monthly installments.
This is a good option for homeowners who want to be prepared for unexpected expenses. You’ll have peace of mind, knowing that you’ll be able to quickly and easily turn a small percentage of your home equity into cash at a moment’s notice.
2. Home Equity Loan
A home equity loan is a one-time occurrence of borrowing against your home equity. You’ll receive a lump sum that can be paid back in monthly installments. Unlike a HELOC, a home equity loan is not a revolving credit line, so you won’t be able to pull cash out over and over.
Home equity loans work well for homeowners who need a large lump sum. This could be used as a down payment on an income property or to finance major renovations for your current home.
3. Cash-Out Refinance
With a cash-out refi, you completely replace the terms of your current home loan with a new home loan. You could use your new mortgage to pay off your old mortgage, keep a minimum amount of equity in the property (typically at least 20%), then pocket the difference.
It’s important to note that your interest rate would change as part of your refinance. So this option only makes sense if the going interest rate is less than the rate on your current mortgage.
4. House hacking
House hacking is when you find a way to generate income from your home. You could rent out a room, for example. Or convert a portion of the property into a rental unit. You can even rent out storage spaces and parking spaces.
Any homeowner can house hack, regardless of the amount of equity you have in your home. House hacking can be a solid way to get cash out of your house without taking out a new loan or selling.
5. Converting Your Home into a Rental
One final option for getting cash out of your house without selling is to convert your house into a rental property.
This is a good option for homeowners who need to relocate (perhaps for work or to be near family) but aren’t yet ready to sell. If you must move, but plan to return to the home, finding renters will ensure regular income. The rental income might be enough to cover your mortgage and operating expenses, plus put a little cash in your pocket each month!
Sequoia Real Estate is Here to Help!
Whether you’re ready to sell, need help converting your home into a rental, or just need a recommendation for a reputable lender to refinance your home, the experts at Sequoia Real Estate can help.
Contact Sequoia today for a free, professional consultation to see what we can do for you in your real estate journey.