For homeowners, one of the silver livings of skyrocketing home values is a sudden increase in your home equity. According to a recent report by CoreLogic, homeowners who have mortgages saw their equity grow by more than 32 percent since last year. That breaks down to an average gain of more than $63,000 for every borrower! What’s more, that equity can be leveraged in a variety of ways to your benefit. Here are five ways to use your home equity to your advantage.
Make a large purchase
When you have home equity, you can tap into it by applying for a home equity loan or line of credit. This extra money can be used in numerous ways, including making large purchases. Have your eye on a vacation home? Use your home equity to fund the down payment. Hoping to take an amazing trip or host a lavish wedding? Tap into that equity to pay for it. You can even use your equity to fund an education.
Invest in your home
Did you ever think about how your home can help you fund renovations? If you’ve been dreaming about upgrading your kitchen, adding a family room, or renovating your home office, then tap into the power of your home equity. When you use your equity to pay for improvements to your home, you’re helping to increase its value. It’s a win-win situation. You can also use your equity to fund upgrades when you’re selling. This can help you get a better asking price or lead to a faster sale.
Prepare for retirement
Your home equity can also be a huge advantage when you’re preparing for retirement. Use your home equity to fund the down payment on a rental home to help boost your retirement income. If you need to make accessibility upgrades to your home, such as ramps or a first-floor master bedroom, then your home equity can help you do that, too. You might even use the money to get an education in your retirement so you can explore a new career.
Consolidate your debt
Home equity can be a powerful and practical financial tool. You don’t need to use it for flashy things, such as home renovations or luxury vacations. Your home equity can also help you consolidate your existing debt. Use it to pay off your mortgage, student loans, medical debt, or credit card debt. You’ll probably get a lower interest rate with a home equity loan or line of credit. It could even help you to improve your credit score in the long run.
Use it for unexpected expenses
Finally, you never know what curveballs life is going to throw at you. When you have home equity to tap into, then you have a safety net. When you open a home equity line of credit, you don’t have to use that money right away. Instead, you can save it for when you need it. It can help you pay for repairs needed after an emergency such as a storm. You can also use it if you need time off from your job to take care of a loved one. And if you’re looking for a change of pace, you can use your home equity to help fund a new business venture. The sky’s the limit!