With home prices increasing over the past few years, many people have a lot of equity in their home. The equity in your home builds as you pay down your mortgage and home values grow. For many, the silver lining in the pandemic was a large equity gain. So how can you use it? And should you?
For some people, your current home may not fit your current needs. Maybe you have outgrown your home and need something larger. Or maybe it’s the opposite and you have become empty nesters and your home is too large. Using that equity to buy a new home may make sense for you. Talk to your realtor and see what options you have.
For some, it may be time to reinvest in your current home. A renovation can be a great way to change your living space if you aren’t ready to move. You can use your equity to help fund a renovation. It may be as simple as taking out a home equity loan to help cover those expenses. Talk with your realtor and decide if the renovations you are thinking about make sense. You want to make sure you get the greatest return on your investment.
With the current economy, it may make sense to do a cash out refinance and use some of your equity to help your financial situation. For some, credit card debt has increased along with other debt. It may be worth looking into a cash out refinance to help offset your monthly expenses. Even if your interest rate increases, your overall monthly payments may decrease more than you expect.
Are you paying mortgage insurance? If so, talk to your lender and see if you can eliminate the MI payment. If you have a conventional mortgage, it can be as simple as an appraisal. If you have a FHA mortgage. you will have to refinance to eliminate the MI, but it may be worthwhile.
For some, knowing you have equity in your home is the most important part. It can help when you are close to retirement. You may be able to downsize your home and not have a new house payment.
Your equity may help you with future decisions. If you aren’t sure if you should use your equity for some projects you have, talk with your realtor, lender or financial planner and make an informed decision!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
