Many homeowners have seen their home equity increase in recent years. However, many aren’t sure how to leverage their newfound equity or what to do with it. We’ll explain how to tap into your home’s equity and lay out some ideas for how to use it.
How To Tap Into Your Home’s Equity
There are multiple ways that a homeowner can tap into their newfound equity. They can do a cash-out refinance, which means refinancing the home with a larger mortgage to lower the rate or reduce monthly payments.
Homeowners can also opt for a home equity loan, a loan taken out against the home’s value and paid off over a period, typically 10-30 years. Or, there’s a home equity line of credit (HELOC), which—instead of a loan requiring the homeowners to take out a lump sum—is a pool of money that can be accessed only when needed, like for emergency repairs.
Ways Homeowners Can Use Their Growing Equity
Whichever avenue homeowners choose, there are many ways for homeowners to use their growing equity to improve their current finances and plan for the future.
Does your home need some expensive repairs that you’ve been putting off, like a leaky roof? Leverage your newfound equity into a new roof or other projects that’ll help increase your home’s value.
Other home improvements that can give your home value a boost includes:
- New garage door
- Remodel the bathroom
- Add a master suite
One way homeowners can leverage their equity is by using a home equity loan for debt consolidation. Essentially, it means borrowing against the equity you built in your home and is beneficial if you’ve got a lot of credit card debt with high-interest rates.
Consolidation allows homeowners to merge multiple debt obligations into a single monthly payment and can help them pay off debt sooner.
Real Estate Investment
You’ve been successful in your real estate investments, so why not take the earnings from your current home and put them towards a new one? Many homeowners use a home equity loan or HELOC to help make a down payment for another property.
It can be a vacation home or a rental property that gives homeowners another income stream with rental income. If you think you want to invest your new equity in a second home in Florida, our agents can show you beautiful Prominence 30A real estate properties that are excellent investments!
Do you have kids planning on going to college soon, or are you considering pursuing higher education yourself? Tuition costs and student debt are rising, but a home equity loan can help pay tuition expenses, so you or your kids don’t have to be saddled with debt to receive an education.
There are many more ways homeowners can use their growing equity to their advantage, but those are just some popular approaches. If you want to leverage equity into a new property in Florida, we can show you some gorgeous homes along the 30A coastline!