<h2 id="turning-home-equity-into-liquidity">Turning Home Equity into Liquidity</h2><p><span style="color:rgb(29,31,33);">After years of working hard and making smart financial choices, your home may be one of your most valuable assets. If costs are higher than expected, life throws you a curveball, or you’re helping your family through something significant, you may want access to cash without selling your home or disrupting your broader financial goals.&nbsp;</span></p><p><span style="color:rgb(29,31,33);">That’s where borrowing against the equity in your home may offer flexibility. Whether you’re looking to cover a major expense or create breathing room in your monthly budget, home equity financing may provide another option to consider.</span></p><h2 id="how-borrowing-against-home-equity-works">How Borrowing Against Home Equity Works</h2><p>When you borrow against your home equity, your home serves as collateral for the loan. A lender evaluates your creditworthiness and the property’s value to determine eligibility and the amount you may be able to borrow based on loan-to-value requirements.</p><p>This allows you to access a portion of your home’s equity without selling the property. Because your home secures the loan, it’s important to understand the repayment terms and potential risks.</p><h2 id="home-equity-loans-and-helocs">Home Equity Loans and HELOCs</h2><p>Homeowners who have built up equity in their homes can unlock it through a fixed home equity loan or a revolving line of credit, known as a <a href="/personal/mortgage/home-equity-line-of-credit">HELOC</a>. These options can be used to cover big expenses, like tuition, medical bills or home improvements, or to consolidate debt.</p><p>Just keep in mind that interest rates can shift, especially with a HELOC, which has a variable rate. Both a home equity loan and a HELOC come with monthly payments you'll need to keep up with. And before consolidating debt, you should consider all factors, including the costs of refinancing compared to the benefits.</p><h2 id="benefits-of-a-home-equity-loan-or-heloc">Benefits of a Home Equity Loan or HELOC</h2><p>Benefits include:</p><ul><li><p><strong>Flexibility: </strong>Borrow only what you need, when you need it.</p></li><li><p><strong>Lower Interest Rates: </strong>Generally lower than credit cards or personal loans.</p></li><li><p><strong>Tax Advantages: </strong>Interest paid on a HELOC might be tax-deductible (consult your tax advisor for details).</p></li></ul><p>This strategy can provide liquidity without requiring you to sell long-term investments or savings, depending on your overall financial situation. Plus, you get flexibility on how and when you repay the loan.</p><p>What is the main difference between a HELOC and a Home Equity Loan? HELOCs work much like a credit card: you can borrow up to a certain limit, repay it and borrow again as needed during the draw period. Home equity loans provide a lump sum amount with a fixed interest rate and fixed monthly payments over a set term. When life gets unpredictable, this approach can be the bridge that gets you through until your finances are more stable.</p><h2 id="risks-and-considerations">Risks and Considerations</h2><p>What are the risks of borrowing against home equity? It’s important to understand how this type of borrowing works and the potential downsides before moving forward.</p><ul><li><p><strong>Variable Interest Rates:</strong> HELOC payments can increase if interest rates rise.</p></li><li><p><strong>Risk of Foreclosure: </strong>Your home is used as collateral. If you fail to make payments, you could risk losing your home.</p></li><li><p><strong>Market Value Changes: </strong>If the value of your home decreases, you could owe more than your home is worth.</p></li></ul><p>Because of these factors, it’s important to talk to a loan officer who can help you weigh the risks and determine whether borrowing against your home aligns with your financial goals.</p><h2 id="when-borrowing-against-home-equity-makes-sense">When Borrowing Against Home Equity Makes Sense</h2><p>Is borrowing against home equity a good idea? Borrowing against your home equity can be a practical way to access cash without selling investments. It may make sense when you need liquidity for large expenses, home improvements or other major financial needs, but it’s important to balance the potential benefits with the risks.</p><h2 id="get-guidance-on-using-home-equity-to-access-cash">Get Guidance on Using Home Equity to Access Cash</h2><p>Thinking about freeing up cash without disrupting your financial goals? A home equity specialist at <a href="/Personal/Support/Contact-Us">First Horizon Bank</a> can walk you through your options and answer your questions.</p><p style="text-align:center;"><a href="/personal/mortgage/home-equity-line-of-credit"><strong>Get Started</strong></a><strong> &nbsp;&nbsp;</strong><a href="/personal/support/calculators/how-much-can-i-borrow-from-my-home-equity-heloc"><strong>Calculate My HELOC</strong></a></p><h2 id="frequently-asked-questions-about-home-equity-loans-and-lines-of-credit"><strong>Frequently Asked Questions about Home Equity Loans and Lines of Credit</strong></h2><h3>What does it mean to borrow against my home equity?</h3><p>Borrowing against home equity means using the value you’ve built in your home as collateral to access cash. You keep ownership of the home, but the lender places a lien on it until the loan is repaid.</p><h3>What is the difference between a HELOC and a home equity loan?</h3><p><strong>HELOC: </strong>Provides a revolving credit line for a set period (usually 10 years). You can borrow, repay and borrow again up to your credit limit. The interest rate is usually variable.<br><strong>Home Equity Loan:</strong> Provides a lump sum amount with a fixed interest rate and fixed monthly payments over a set term.</p><h3>What are the main benefits of a home equity loan or line of credit?</h3><p>Benefits of borrowing against home equity loan or line, include flexibility, interest rates that are typically lower than credit cards and potential tax advantages on interest paid. Consult your tax advisor for details.</p><h3>How much can I borrow?</h3><p>The amount depends on:</p><ul><li><p>Your home’s appraised value</p></li><li><p>Your outstanding mortgage balance</p></li><li><p>The lender’s loan-to-value (LTV) limits</p></li><li><p>Your credit profile and income</p></li></ul><h3>How long does the approval process take?</h3><p>Timelines vary, but the process usually includes:</p><ul><li><p>Application and credit review</p></li><li><p>Home appraisal</p></li><li><p>Underwriting</p></li><li><p>Closing</p></li></ul><p>This can take anywhere from a couple of weeks to over a month.</p><h3>When is the best time to get a home equity loan?</h3><p>It’s most effective when you have stable income and a clear repayment strategy and when you need liquidity for large expenses, to consolidate high-interest debt or to make home improvements without having to sell long-term investments.</p><h3>Who can help me decide if this is right for me?</h3><p>A home equity specialist can walk you through your options, explain costs and help you evaluate whether this approach aligns with your financial goals.</p><h3>How do I apply for a home equity loan or HELOC?</h3><p>You can apply for a home equity loan or HELOC with First Horizon Bank by visiting <a href="/Landing/Lending/Home-Equity-Quickstart-Landing">our website</a>, calling us at <a href="tel:8662064330">866-206-4330</a> or <a href="/Personal/Support/Contact-Us">visiting a branch</a>.</p>

Learn how borrowing against assets such as home equity can provide liquidity without selling investments. Understand how HELOCs and home equity loans work, their benefits and key risks.

Borrowing Against Assets as a Way to Access Cash

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Borrowing Against Assets as a Way to Access Cash