A home equity loan is a good way to get a large sum of cash using the equity you have in your home. Equity is the sum of money remaining after you subtract what you owe from the fair market value of your home and surrounding property. (If that amount is negative, you have no equity with which to borrow.) However, you might not have a lot of equity yet after the first ten years in your home. If you want a larger home equity loan, here is how you can accomplish that:
Option A: Wait to Build More Equity
After the first ten years of owning a home, you are finally starting to pay on the principal you initially borrowed rather than on just the interest. In another five years, you will probably have enough of your home loan paid for a few grand, and after another five to ten years, you should be almost a third to a half of the way through your loan payments. If you just wait a few more years, you will have enough equity built up to get a bigger loan.
Option B: Can't Wait? Invest
Of course, when you cannot wait that long for more equity to build, you could take a home equity loan now. Then you take the money and invest it in high-yield CDs and investments with guaranteed profits. It is akin to robbing Peter to pay Paul as you begin to repay the loan with your investments' earnings, but if you are smart about it, it can work. The key is to invest in anything that has a short ROI (return on investment) and an interest rate that is higher than the interest rate on your home equity loan.
Option C: Pay off the Vacation Home and Then Take an Equity Loan on That Property
Here is a switch; your vacation property only has a few thousand to go before you have the loan paid in full. If you can get that money from taking an equity loan on your primary residence, you can pay off the vacation property. With the vacation home free and clear, you can now take a home equity loan against the vacation property for the full value of the property and house sitting on it. Turn around, pay off the smaller equity loan on your primary home, and now you have a much larger pile of cash!