Ways You Can Take Advantage of Your Home Equity
posted on Saturday, October 8, 2022 in Financial Tips
One of the things that you should know as a homeowner is all about your home equity. It is essentially the current market value of your property minus any of the outstanding liens or claims to your home, such as a mortgage.
Putting in a 20% down payment for your home automatically adds to your equity. As you build your mortgage over time, the equity of your house increases even further. If you’re looking for good ways you can take advantage of your equity, read this blog:
Use Your Equity to Sell Your House
One of the most traditional uses of your current home equity is to sell your existing home so that you can buy a new one. If you ever plan to sell your house, most of the time you’ll likely use some of the proceeds to pay off the remaining balance in your mortgage.
However, there’s a chance for you to profit from the sale if there are differences between the price you’ve sold the house for and the mortgage you still owe. This extra profit can be used to buy a better home, increasing your home equity further.
Use Your Equity for Remodeling and Renovation
Many homeowners use their equity to finance a remodeling or renovation project on their house. That’s because a lot of home equity loans that financial institutions offer have lower interest rates, often due to having the property as collateral. There’s also the fact that these types of loans can be tax deductible as long as the loan is used for substantial improvements or renovations to your house.
Use Your Equity for Emergency Funds
There are a handful of ways to secure emergency funds from your equity. You can use a regular home equity loan to borrow a lump sum of cash. There is also a home equity line of credit (HELOC). A HELOC is a line of credit that gives you a flexible revolving credit line for more significant expenses.
You can also try out getting a cash-out mortgage refinancing. It replaces your current home loan for a larger mortgage and lets you take advantage of your existing equity and get the difference between your old and new mortgages in cash.
If you’re ready to tap into your current home equity for whatever you need, contact us at Community 1st Credit Union. Our helpful and professional C1st representatives are always prepared to provide you with options you can choose from.