Home Equity: Powerful Tool, Not Magic Eraser
Update: 2025-12-20
Description
Home values have surged, leaving many homeowners with significant equity. A Reddit user inquired about using this equity to eliminate their mortgage, but experts advise against it. Home equity is calculated by subtracting the remaining mortgage from the homes current value. While lenders may allow borrowing up to 80% of the homes value, it often comes with higher interest rates and fees. Refinancing the original mortgage may be a better option if rates are lower. Home equity can be used wisely for debt consolidation, renovations, education, or business startups, but its not a magic eraser for mortgages.
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