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You have made the choice to refinance your home, contacted a lender, and soon you hear the word appraisal. If you are like me, your first thought is “what is that, and how much is it going to cost me?”. An appraisal is an evaluation of the value of your property. A qualified appraiser completes it. It can cost anywhere from $200 to $500, depending on the size of your home. The homeowner pays the fee, but often it is combined with the closing costs. Your lender will supply the appraiser. If you choose to contract your own appraiser, verify with your lender what it is they are looking for. Each lender has a guideline for how an appraisal should be done. For example, a Comparative Market Analysis is in essence a drive-by to compare your property to others that have sold in your area. These appraisals usually cost less, and if performed by a real estate agent or broker, may even be free. If your appraisal is not specific enough, you may have to pay for a second appraisal.

Congratulations! The value of your house has increased, your payments have steadily lowered your mortgage, and you have equity built up in your home! Perhaps you should take advantage of that equity by taking out a home equity loan and using that hard-earned equity for a great cause. Need some ideas? We have plenty! Here are ten of our favorites.

10. Fix up the house and make it worth even more!
Remodel that outdated kitchen, install your whirlpool tub, or replace the windows and save on your energy bill year round. Or you could install new cabinets, replace the carpet, put a new roof on… Well, the options are only as limited as your imagination!

So you’ve made the decision to use your equity in your home as security for a loan. Now you have to decide exactly what type of loan to take out. With the many choices for borrowing against your home, the decision can be a confusing one, and the wrong one can cost you money you shouldn’t have to spend. If you’ve decided to cash in on the equity in your home, but not exactly how to do it, let’s take a look at some of the options available to you.

Mortgage Refinance (A Cash-out Refi)
For many people, the most attractive option is a cash out refinance, often referred to as a ‘refi’. A refinance isn’t technically a home equity loan, or a second mortgage. It’s a replacement mortgage. When you refinance your mortgage, you use the money to pay off your existing mortgage and make payments on the new one instead. When should you consider a refinance?