Four Ways to Put Your Home Equity to Work

If you own a home, chances are that your equity has grown substantially in recent years. This occurs as property values rise and your mortgage balance decreases over time. The recent ‘unicorn’ years saw a surge in home prices, leading to even more significant gains in equity than anticipated.

According to CoreLogic’s latest Equity Insights Report, the average homeowner currently holds over $274,000 in equity. This significant equity can open up various possibilities for you. A recent Bankrate article emphasizes the importance of understanding and leveraging your home equity, especially given the positive side effect of substantial equity growth during the pandemic.

Here are a few ways you can make the most of your home equity:

Find Your Ideal Home:

If your current residence no longer suits your needs, it might be time to consider a move to a larger or smaller space. You can utilize your equity as a down payment for a new home that aligns with your evolving lifestyle. An experienced real estate agent can help assess your equity and guide you in using it effectively for your next property purchase.

Rejuvenate Your Current Home:

If you’re not ready to relocate, renovations offer an excellent option for transforming your living environment. Home improvement projects allow you to customize your space according to your preferences and requirements. It’s wise to consult a real estate professional for advice on which upgrades can enhance your home’s value, ensuring a worthwhile investment when you eventually sell.

Chase Your Aspirations:

Your home equity can also be a catalyst for realizing lifelong dreams. This could involve launching a new business, planning for retirement, or funding education endeavors. While it’s essential to use your equity judiciously, allocating it towards meaningful and impactful pursuits can create a substantial positive impact on your life.

Navigate Financial Challenges to Prevent Foreclosure:

While foreclosure filings currently remain below average, some homeowners still encounter the foreclosure process each year. In case you face financial difficulties, comprehending your options and leveraging your equity can be vital. Equity can serve as a financial safety net to help during unforeseen circumstances that may disrupt your ability to meet mortgage payments on schedule.

Freddie Mac elaborates on this aspect:

“If selling your home is the best choice, selling with equity can be advantageous. Selling with equity involves utilizing the proceeds from selling your property at a higher price than the remaining mortgage balance to settle your outstanding mortgage debt.”

In Summary:

Your equity holds the potential to reshape your circumstances, whether it involves reinvesting in your requirements, pursuing ambitions, or safeguarding against foreclosure during challenging periods. If you’re uncertain about your current home equity, you should connect with a local real estate expert to commence strategic planning for your next steps.