Equity Takeout

DEFINITION of 'Equity Takeout'

Taking money out of a property to use for a variety of purposes. Equity takeout allows homeowners to tap into the equity of their home. When an equity takeout is done on your home, the principal on the value of the mortgage will increase, if there is an existing mortgage on the property. If you don't have a mortgage, you are borrowing against the property.


This mortgage is available in two forms: the traditional fixed rate mortgage or a variable line of credit option. The main difference between the fixed and variable types is that the traditional fixed provides stable interest rates for a predetermined period of time and has limited prepayment options. The variable line has a fluctuating interest rate and flexible prepayment options. A equity takeout is also referred to as an equity takeout mortgage.

BREAKING DOWN 'Equity Takeout'

Homeowners take money out of their property for different reasons including investment in other real estate properties, stocks or equities, and purchase of properties that are considered recreational such as cottage or vacation homes. Other purposes include using the money to cover tuition fees, home renovations or startup business costs.

RELATED TERMS
  1. Take-Out Commitment

    A specific type of mortgage purchase agreement. Under a take-out ...
  2. Take-Out Lender

    A type of financial institution that provides a long-term mortgage ...
  3. Take-Out Loan

    A type of long-term financing (usually) on a piece of real property. ...
  4. Takeout Value

    The estimated value of a company if it were to be taken private ...
  5. Home Equity

    The value of ownership built up in a home or property that represents ...
  6. Takeout

    A slang term denoting the purchase of a company through an acquisition, ...
Related Articles
  1. Investing

    Learn How To Lower Your Second Mortgage Rate

    Make a second property more affordable by taking advantage of low mortgage rates to refinance it.
  2. Products and Investments

    Reverse Mortgages: Right for Clients? Not Often

    Reverse mortgages are a legitimate vehicle for folks age 62 and up to tap into the equity in their homes for other uses. Here's what to consider with them.
  3. Home & Auto

    Mortgage Options For Underwater Homeowners

    Find out what options are available when your mortgage is greater than the value of your home.
  4. Credit & Loans

    Guidelines for FHA Reverse Mortgages

    FHA guidelines protect borrowers from major mistakes, prevent lenders from taking advantage of borrowers and encourage lenders to offer reverse mortgages.
  5. Options & Futures

    Make A Risk-Based Mortgage Decision

    Find out how to choose which mortgage style is right for you.
  6. Home & Auto

    Should You Get a Reverse Mortgage?

    A reverse mortgage allows seniors to take advantage of the equity in their home. But is it a good idea?
  7. Credit & Loans

    5 Signs a Reverse Mortgage Is a Bad Idea

    Here are the key situations when you should probably pass on this type of home loan.
  8. Home & Auto

    Comparing Reverse Mortgages vs. Forward Mortgages

    Which one a homeowner chooses depends on where you are at this point in your life, personally and financially.
  9. Retirement

    Additional Streams of Income for Seniors

    Find out how a reverse mortgage can work in your favor during retirement.
  10. Home & Auto

    How Does A Reverse Mortgage Work?

    A homeowner who’s at least 62 years old can use a reverse mortgage to tap into her home’s equity for money. The house serves as the loan’s collateral. The loan is repaid when the homeowner dies, ...
RELATED FAQS
  1. What are the requirements to apply for a reverse mortgage loan?

    For homeowners of a certain age who wish to stay in their homes but are finding it costly, a reverse mortgage could be the ... Read Answer >>
  2. Is it a good idea to add a reverse mortgage to your retirement strategy?

    A reverse mortgage can be a great way to increase retirement income. Does it work for everyone? What happens after a homeowner ... Read Answer >>
  3. What are the differences between a home equity line of credit (HELOC) and a home ...

    Learn the differences between a home equity loan and a home equity line of credit, and find out how to select the one that ... Read Answer >>
  4. How can I make equity investments in real estate?

    Invest in real estate equity through buying and selling real property or through other more liquid investments like real ... Read Answer >>
  5. What alternatives are there to a reverse mortgage?

    Unlock the money tied up in your home with alternatives to a reverse mortgage, such as downsizing, selling your home or refinancing. Read Answer >>
  6. How does the loan-to-value ratio affect my mortgage payments?

    Understand what the loan to value ratio is, how the ratio is calculated and learn how it has an impact on your mortgage payments ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center