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. Home Equity

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

    A slang term denoting the purchase of a company through an acquisition, ...
  6. Variable Rate Mortgage

    A type of home loan in which the interest rate is not fixed. ...
Related Articles
  1. Personal Finance

    Is a Reverse Mortgage Right for You?

    There are pros and cons to consider before taking out a reverse mortgage on your home.
  2. Personal Finance

    Make A Risk-Based Mortgage Decision

    Find out how to choose which mortgage style is right for you.
  3. Personal Finance

    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.
  4. Personal Finance

    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?
  5. Personal Finance

    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.
  6. Personal Finance

    Reverse Mortgages: Why They're Really Too Good To Be True

    Americans are increasingly turning home equity to cash - but this transaction is not as simple as it sounds.
  7. Retirement

    Know How a Reverse Mortgages Work?

    The basics of getting a reverse mortgage, with detailed information on how to qualify and what to watch out for.
  8. Personal Finance

    5 Reverse Mortgage Scams

    Reverse mortgages can be a valuable financial tool, but the mortgage market is fraught with scams and schemes.
  9. Retirement

    Additional Streams of Income for Seniors

    Find out how a reverse mortgage can work in your favor during retirement.
  10. Personal Finance

    Shopping for a Mortgage in 2017? Use This Tool First

    As home-buying technology has progressed, the process of finding the best mortgages rates for 2017 can all be done online.
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 >>
Hot Definitions
  1. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  2. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  3. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  4. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
Trading Center