Home Equity Uses
If you're a homeowner, there's a high probability that your home equity has experienced significant growth in recent years. Equity accumulates over time due to rising home values and the gradual repayment of your mortgage. Particularly during the period of substantial home price increases known as the 'unicorn' years, your equity expansion might be more substantial than you realize.
According to the latest Equity Insights Report from CoreLogic, the typical homeowner currently possesses over $274,000 in equity. This considerable equity has the potential to contribute to various objectives. As outlined in a recent piece by Bankrate:
"While the pandemic posed serious challenges, homeowners benefited from a considerable equity upswing. Grasping the mechanics of home equity and how to employ it is essential for every homeowner."
Outlined below are a few instances of how you can harness your home equity to your advantage:
Acquire a Residence Suited to Your Requirements
If your current dwelling no longer aligns with your needs, it might be time to contemplate a move to a larger or smaller home. Your equity could be utilized as a down payment for a residence that accommodates your evolving lifestyle. A real estate professional can assist you in assessing the amount of equity available and how to utilize it when purchasing your next property.
Reinvest in Your Current Residence
Should you wish to modify your living space but are not yet ready to relocate, home renovations present an attractive option. These projects grant you the flexibility to tailor your home to your preferences and personal style. However, it's crucial to evaluate the lasting advantages that specific upgrades can confer on your property's value. Rely on a real estate expert for prudent guidance on prioritizing improvement initiatives that yield optimal returns upon eventual resale.
Pursue Personal Aspirations
Your home equity can also serve as a catalyst for realizing long-held dreams. This might encompass investing in a fresh business endeavor, funding your retirement, or financing education. While it's advisable to employ your equity judiciously and avoid frivolous expenses, its responsible utilization for significant and impactful endeavors can significantly transform your life.
Comprehend Options to Avert Foreclosure
Presently, the number of foreclosure filings remains below historical norms, alleviating concerns of a flood of foreclosed properties entering the market. Nonetheless, a subset of homeowners still grapple with foreclosure proceedings annually. If you encounter financial challenges, possessing a clear understanding of your choices and how your equity can offer assistance becomes paramount. Equity can function as a financial safety net, deployable during periods of unforeseen disruptions or financial hardships that jeopardize timely mortgage payments.
To elaborate further, an article by Freddie Mac articulates:
"If departing from your property stands as the optimal course, selling with equity could prove advantageous. This involves employing the proceeds from your property's sale at a higher price than your remaining mortgage balance to settle the outstanding mortgage debt."
In Summation
Your equity wields transformative potential in reinvesting according to your needs, pursuing aspirations, and even mitigating foreclosure risks during trying periods. If you're uncertain about the extent of your home equity, consider engaging a local real estate professional to initiate the planning of your subsequent steps.
For more information, give us a call at (907) 694-3434.