Equity Takeout

AAA

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.

INVESTOPEDIA EXPLAINS '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. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Equity Stripping

    The process of reducing the overall equity in a property in order ...
  3. Mortgage Insurance

    An insurance policy that protects a mortgage lender or title ...
  4. Equity

    1. A stock or any other security representing an ownership interest. ...
  5. Line Of Credit - LOC

    An arrangement between a financial institution, usually a bank, ...
  6. Home Equity Line Of Credit - HELOC

    A line of credit extended to a homeowner that uses the borrower's ...
Related Articles
  1. Credit & Loans

    Mortgage Points: What's The Point?

    Learn how to pay less for your home in the long run, or save in the short run.
  2. Home & Auto

    How To Analyze Real Estate Investment Trusts

    REITs are much like dividend-paying companies, but analyzing them requires consideration of the accounting treatment of property.
  3. Options & Futures

    Home-Equity Loans: What You Need To Know

    We shed light on why consumers decide to use this form of debt and whether it is a good alternative.
  4. Options & Futures

    Home-Equity Loans: The Costs

    Learn the factors to consider when comparing the different programs offered by various lenders.
  5. Taxes

    Avoid Capital Gains Tax On Your Home Sale

    If you have property to sell and want to avoid capital gains tax, a Section 1031 exchange may be the answer.
  6. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  7. Savings

    7 Ways To Recession-Proof Your Life

    Find out what you can do to prepare and cope in tough economic times.
  8. Credit & Loans

    Protect Yourself From HELOC Fraud

    Identity thieves are using home equity lines of credit to commit their crimes.
  9. Options & Futures

    The Reverse Mortgage: A Retirement Tool

    Discover another way to fund your retirement without having to make payments on a loan.
  10. Home & Auto

    Where are home values falling the fastest in the US, and why?

    Learn about the metropolitan areas in the United States experiencing the largest drops in median single family homes values in 2014 and the reasons behind it.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center