Everyone is looking forward to the holiday season. But to create happy holidays, you will always need some amount of financing.

If you have built up equity in the home you own, you have several options for using that equity to fund holiday expenses.

As you probably know, home equity refers to the difference between the amount you owe on your mortgage and the value of your property.

Every time you make a payment on your mortgage, you get to own a little more of your home. For instance, you may have bought your property for $200,000 and paid off $75,000, in which case you would have home equity of $75,000.

Once you make your final mortgage payment, you will own your property outright.

In the meantime, it could be worth taking out some of the money from your home equity to pay for holiday costs.

Bear in mind that your property could now be worth more than its value at the time of purchase. Therefore, it could make even more sense to use your home equity to gain cash to spend on the upcoming holiday season and ensure you and your loved ones have a happy and memorable time.

So, let us take a look at just some of the best ways that you can finance your happy holidays with the help of your home equity. 

Get a Home Equity Loan

A home equity loan is a type of second mortgage. It is based on the current value of your property, beyond what you owe for your primary mortgage.

By getting a home equity loan, you will attain a lump sum that you can use to spend for any purpose, such as on the holidays.

Like your primary mortgage, with a home equity loan, you will borrow a certain amount and then be required to pay back a fixed amount on a monthly basis.

It is a good idea to use an online calculator to find out the answer to “how much can i afford in mortgage?” and determine whether a home equity loan is a good choice for your specific circumstances.

The downside to home equity loans is the upfront closing costs can be high. But on the upside, you can usually get a low, fixed rate with a home equity loan and you will know when the exact payoff date of the loan is.

Consider a Home Equity Line of Credit

A Home Equity Line of Credit, which is commonly known as a HELOC, is basically a second mortgage that is structured like a credit card.

You would borrow against the home equity and then use a debit card or checks that are linked to your line of credit.

The good thing about a HELOC is you only pay the interest on the credit that you use. Furthermore, HELOC rates are often much lower than the average rates of credit cards, so it can often make sense to get a HELOC rather than getting a new credit card to pay for the holiday season.

With a HELOC, you can usually get a low, variable rate and pay no or low closing costs. However, HELOCs have adjustable rates, which means you could potentially see your rates go up.

A Cash-out Refinance Could Be a Good Idea

Another option available to you is a cash-out refinance.

With this financing option, you would replace your previous mortgage with a new one.

The new loan amount would be larger than what you owe on your property. The excess amount is paid to you.

However, it is only worthwhile going down the cash-out refinancing route if you have built up enough home equity by making your mortgage payments over a period of time or if the value of your home has risen significantly.