3 Ways You Can Use Your Home Equity
If you own a home, chances are your equity has grown significantly in recent years as home prices have risen and you have made your monthly mortgage payments. Home equity accumulates over time and can assist you in achieving specific goals. According to CoreLogic's latest Equity Insights Report, the average home loan borrower currently has nearly $300,000 in equity.
As you weigh your options, it's critical to understand your assets and how you can leverage them, especially in light of inflation and talk of a recession. A real estate professional is the best resource for determining how much home equity you have and advising you on how to use it. Here are some examples:
1. Buy a Home That Fits Your Needs
If you no longer have enough space, it may be time to relocate to a larger house. It's also possible that you have too much space and require something smaller. In any case, consider using your equity to fund a move into a home that better suits your changing lifestyle.
If you want to improve your home, you can use your equity to put down on the home of your dreams. If you plan to downsize, you may be surprised to learn that your equity may cover some, if not all, of the cost of your next home. A real estate advisor can help you determine how much equity you have and how to apply it to the purchase of your next home.
2. Reinvest in Your Current House
According to a recent Point survey, 39% of homeowners would invest in home improvement projects if they could tap into their equity. This is a great option if you want to make some changes to your living space but aren't ready to move yet.
Home improvement projects allow you to tailor your home to your specific needs and preferences. Just keep in mind that some home improvements add more value to your home and are more likely to appeal to future buyers than others. According to a National Association of Realtors (NAR) report, refinishing or replacing wood flooring has a high cost recovery. Consult a local professional for the best advice on which projects to invest in to maximize your return when you sell.
3. Pursue Your Personal Goals
Home equity can help you achieve your life goals in addition to helping you move or update your home. This could include investing in a new business, retiring or downsizing, or funding a college education. While you should not waste your equity, using it to start a business or put it toward education costs can help you achieve other long-term goals.
Your equity has the potential to change the game. If you're unsure how much equity you have in your home, consult with a reputable real estate professional so you can begin planning your next move.
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