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With more than 60% of first mortgages at a rate less than 4%, and more than 80% with rates of less than 5%, it seems like no one would refinance at today's rates in order to gain access to their homes equity, right? The decision to access your home equity is as unique to your situation as your fingerprint, as well as whether to do that with a second loan, or refinance to a potentially higher interest rate.

Home equity refers to the portion of a home's value that is owned by the homeowner. It is the difference between a home's current market value and the outstanding mortgage balance. I like to explain it this way, your home is a piggy bank shaped like a house and the equity is the amount of money you have saved in it.

For example, if a homeowner's property is worth $500,000 and they have a remaining mortgage balance of $300,000, their home equity would be $200,000 ($500,000 - $300,000 = $200,000).

As homeowners make mortgage payments over time, they build equity in their homes. Additionally, if the value of the property increases, the homeowner's equity will increase as well.

People might use their home equity for various reasons, such as:

1. Debt consolidation: Home equity can be used to pay off high-interest debt, such as credit card debt or personal loans, which can help reduce monthly payments and save money on interest charges, as well as reduce the amount you spend on these bills out of your pocket each month.

2. Home improvements: Homeowners may use their home equity to fund home renovation or improvement projects, such as adding a new room or upgrading the kitchen or bathroom.

3. Education expenses: Homeowners may use their home equity to pay for education expenses, such as college tuition or vocational training.

4. Medical expenses: Home equity can be used to pay for unexpected medical expenses, such as surgery or hospitalization.

5. Business purposes: Homeowners may use their home equity to fund a business venture, such as starting a new business or expanding an existing one.

6. Emergencies: Home equity can be used to cover unexpected expenses or emergencies, such as a major car repair or a home repair.

When thinking about refinancing to access equity, first consider what the goal is you are trying to accomplish. Many homeowners refinance to consolidate debt from extremely high interest credit cards and end up spending less out of pocket. In this case, they may not mind that the interest rate on the mortgage is higher. Others may consider a home equity line of credit (HELOC). This allows you to access your home's equity without changing the rate, term, or payment on the first mortgage.

For more information on accessing your homes equity and determining what may be the smartest use of you money, reach out for a no obligation equity and debt strategy call.

Alysha Boles is a Mortgage Loan Advisor and Debt Strategist that specializes in both the planning, pre-approval and loan process of mortgage lending. Licensed in California and Texas and the ability to connect you with a licensed professional in all 50 states. She can be reached at (661) 858-7214, or inquire online at http://www.advisoralysha.com.