Throughout the United States, housing prices are on the rise, and this is a great time for many homeowners. While you invest in your home and pay off your mortgage, you’ll be happy to see your equity and assets grow. Many homeowners can use hundreds of thousands in home equity to pursue a myriad of dreams, or to weather rising inflation. Talking to real estate and mortgage professional is a great way to start generating plans. This week, the team at Foundation Mortgage shares ways to leverage home equity and achieve your goals in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee.
Using Equity to Adjust Your Lifestyle and Home Needs
One of the many ways people use their home equity is through upsizing or downsizing their home. Some desire to move to a larger place as their families grow. Others may want to downsize. Furthermore, many are buying second homes and turning their first home into an investment to lease to renters. One way to do this is to use the equity in your home to put a down payment on a new house. Depending on your aims, the equity may cover a large chunk of the price. Talk to one of the real estate experts at Foundation Mortgage to learn how much equity you have, and how you can get a home equity loan or line of credit.
Using Equity to Upgrade Your Current Home
As current homeowners continue to pay off their mortgage, several key upgrades and modernizing will be needed. Many are using recent federal programs and energy efficiency equity loans to help save on utility bills or install solar. Such renovations add value to your home. For example, changing flooring or adding space for new rooms or home offices can increase interest from buyers. This can set you up well if you do plan to sell down the line. You can chat with local real estate professionals to learn what upgrades will grow the value of your home most effectively.
Using home equity to upgrade your current home involves tapping into the value you’ve built in your property to fund renovations or improvements. There are a few common ways to do this:
Home Equity Loan: A home equity loan, also known as a second mortgage, allows you to borrow a lump sum of money against the equity in your home. You’ll receive the funds upfront and repay the loan with fixed monthly payments over a specified term. Interest rates are typically fixed. This option is suitable if you need a substantial amount of money for a larger renovation project.
Home Equity Line of Credit (HELOC): A HELOC is a revolving line of credit based on the equity in your home. Similar to a credit card, you can borrow from the line of credit as needed and make payments based on the amount you’ve borrowed. HELOCs usually have variable interest rates. This is a flexible option for ongoing projects or those with unpredictable costs.
Cash-Out Refinance: With a cash-out refinance, you replace your current mortgage with a new one that’s larger than the existing loan balance. The difference between the old and new mortgage amount is given to you as cash. This approach gives you a lump sum of money to use for upgrades, but keep in mind that it will change your mortgage terms and potentially your interest rate.
Personal Loan: While not using home equity directly, you could also consider a personal loan for smaller renovation projects. These loans are unsecured and don’t require your home as collateral. Interest rates might be higher compared to home equity options, but you won’t risk your home.
Using Equity to Grow Your Wealth in Other Ways
Did you know that you can use the equity in your home to start a new business or pursue advanced education? Many use it to help put themselves or their children through college. Others coming closer to retirement are using equity to downsize or retire early. Whatever your dreams, leveraging your home value can help you gain wealth and ensure a prosperous future for your family.
The caring team at Foundation Mortgage is here to help you learn more about using home equity in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee. You’re welcome to call and brainstorm with us on how to improve your life today!