Many people have been fortunate that their homes’ market values have increased since they bought them, resulting in a marked increase in home equity as well. This is possible because equity is defined as the difference between a property’s market value and the mortgage still owed by the home owner.
So You’ve Got Lots of Equity, Now What?
Some people choose to sell their home to capitalize on the marked increase in value. There is nothing stopping you from doing the same but do you really want to move out of your home and restart again in a new neighbourhood?
If the answer is no, then fret not. There are a lot more other ways you can tap into your home equity without going for a home sale. You can choose to refinance, go for a Home Equity Loan, or try applying for a Home Equity Line of Credit.
But here’s the thing. Cashing out just because there is money available for you is the wrong approach to using your home equity. You have to make tapping into it worth the trouble since going for any of those mentioned will incur fees.
The good news is that if you have plans or project that you’ve been putting off because you don’t have the funds to pursue them, then using your home equity to turn those projects and plans into reality is a smart solution!
Below are the best ways that you can use your home equity to improve your life:
Funding A Home Renovation
Paying for a home renovation is perhaps the most popular way for homeowners to use their home equity. In fact it is estimated that $12.8 billion of the $41 billion worth of equity that was taken out in 2016 was used by homeowners to fund home repairs and home renovations. This is a smart move because improving your home in any way will only serve to further increase its value.
Investing in Education
Investing in your or a family member’s education is a great idea. Further education means better professional opportunities that will result to a higher potential income in the future.
Purchasing Another Property
Your existing equity could be used to help finance the down payment for an investment property as well as needed renovations. You just have to be sure that you’re not spreading your finances too thin and that you have enough cash flow to pay back your equity within a reasonable amount of time.
It may sound absurd to use a loan to pay for debts but if you do the math, you’ll see that using your home equity to consolidate debts is actually a very smart move. Why? Because doing this will allow you to pay high-interest debts and improve your credit score. This means that you’ll be saving thousands of dollars worth of interest payments!
Want to tap your home equity? Let our professional mortgage brokers help you. We assist clients from application until they are approved. Contact us today to find out more details!