Your home value may have increased significantly since you purchased your home, particularly if you bought prior to 2020.
Homes are worth more and therefore net worth has increased, meaning you now have more home equity available to possibly access.
What is home equity? It is the difference between the value of your home and how much you owe on the mortgage. If qualified, you can borrow up to 80% of your home’s appraised lending value.
What can you use home equity for? You can use your home equity really for whatever purpose you want but here are a few of the most common requests that I am seeing lately.
Investing in real estate
Many are now recognizing the opportunities that are available to invest in real estate to build wealth. Some are first time rental property buyers who are looking to build an investment property portfolio over the years but many are closer to retirement and are purchasing a property now to rent out while looking towards that becoming their primary residence down the road. Real estate can be a great investment to add to your portfolio for long term investment and to create income. Utilizing the existing equity in your primary residence could be the way to get started building your portfolio.
With the current lack of inventory many are now looking to renovate and upgrade their current homes rather than moving. Some are adding secondary suites in their homes as a mortgage helper. This can be accomplished by either setting up a home equity line of credit or a totally new mortgage. A full financial review with a mortgage broker is the first step to determine which option is best.
Buying a vacation property
Many dream of a family vacation property. By accessing your home equity you can obtain funds for the down payment on a vacation property.
Consolidating high interest debt
With rising interest rates and the high cost of living, now might be a great time to take a look at eliminating high interest credit card debt, unsecured lines of credit or auto loans. There are many benefits to a refinance for debt consolidation including the following:
• A much lower monthly interest rate for all of your debts
• Lower monthly payments by either securing a lower mortgage rate or by extending the mortgage term
• The comfort and convenience of making only one monthly payment instead of making multiple payments on your credit cards and other loans
• Improving your credit score by reducing the amount you owe and now being able to make all of your payments on time
Not sure if accessing home equity is right for you? The numbers don’t lie. Let’s run them together and then you’ll have an honest, unbiased recommendation and a plan of action.
Give me a call at 1-888-561-2679 for a pressure-free consultation to run the numbers or you can book an appointment on my calendar at calendly.com/april-dunn
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.