Home prices have skyrocketed across the country, and experts predict that they will continue rising – about 11% this year and 3% next year. These projections include considerations for rising inflation and reactionary interest rates. So, with all the equity that you, as a homeowner, have earned over recent months, you may be wondering if you should use it and how. We have 4 smart ways you can use the equity in your home – and one thing you definitely should not do.
Renovate Your Home
One of the most popular options for using the equity in your home is remodeling, upgrading, or repairing it. This way you are using your home’s value to increase its worth even more.
While there may be necessary repairs that need completing, you should more closely consider what other upgrades or remodels will yield the best home value. Here are some of the top returns on investment:
- New garage door
- Minor or mid-range kitchen remodels (You don’t need a complete overhaul for the best value!)
- Mid-range bathroom remodel
- New siding
- New windows
- Manufactured stone veneer for the front facade
- Adding a wood deck (Composite decks yield slightly less ROI.)
- Adding a home office (With the rise in remote-working, this is an optimal feature for home buyers.)
- An open floor plan (A majority of home buyers look for this feature.)
- Finishing your basement (HomeAdvisor says this can add about 85% ROI)
- Energy-efficient upgrades (This will lower your energy costs now and also add appeal when you sell.)
Renovate Your Finances
One great option for using the equity in your home – pay off your bills! A home equity loan typically has much lower interest rates than most major credit cards, and those monthly, high-interest payments can really put a dent in your budget.
Put your equity to work for you, ease your stress, and free up your budget by consolidating or paying off those nagging, long-standing bills.
Invest in Your (Or Someone Else’s) Future
Another way to use the equity in your home is education costs. College tuition is famously high and rising higher – add in on-campus living costs, and that bachelor’s or master’s degree becomes even more of a financial burden. A low-rate (fixed-rate) home equity loan can easily help relieve the cost of investing in you or your child’s future.
You can also use your home’s equity for opening a small business. Whether it’s a side gig you want to start in your free time, or you’re ditching your day job for an entrepreneurial dream, you can turn the equity in your home into a little start-up cash.
One last investment opportunity? Property! You can use the equity in your home for buying up other properties and adding even more value and equity to your financial portfolio.
Unforeseen Emergencies
While it’s always smart to build your savings in the event of an emergency, life is famous for catching us off guard. If some sudden event or healthcare crisis is dragging down your budget, your home’s equity can alleviate the burden of these costs.
One Major Don’t for Using Your Home Equity
Don’t use the equity in your home for risky investments. It’s not advisable to use your home’s equity for investing in stocks, bonds, or mutual funds. Their unpredictability makes this an unwise use for the value you’ve stored up in your home.
Home Equity Options at Discovery FCU
Discovery FCU is still offering great, affordable loan rates for both home equity loans and HELOCs (home equity line of credit). Plus, we’re paying up to $309.00 in application and processing fees (including appraisal, flood determination, property search, mortgage documentation, and recording fees).
On top of that, we’ll give you a $100.00 Visa Gift Card when you finance $10,000 or more in new money with a fixed-rate home equity loan or home equity line of credit. It’s our way of saying thank you for choosing Discovery FCU as your home equity partner.
Now, more than ever, it’s a great time to invest in your home and invest in yourself. Talk with one of our loan specialists or apply online today! Visit https://discoveryfcu.org/borrow/home-equity/ for more information.