For many homeowners, their largest financial asset is their home equity.

But equity sitting inside a house does not automatically create cash flow.

There are several ways homeowners may access it:

• HELOC
• Home equity loan
• Cash-out refinance
• Sale of the property

The right choice depends heavily on your existing mortgage.

If you already have a very low first-mortgage rate, replacing the entire mortgage may be expensive.

A second mortgage or HELOC may allow you to keep the low-rate first loan.

Homeowners sometimes use equity to:

• Consolidate expensive debt
• Remodel
• Buy investment property
• Fund a business
• Build cash reserves

Home equity is a financial tool.

Like any tool, it works best when there is a clear strategy behind it.