What can you do with your home equity?

Posted by Jen Allen on Thursday, May 4th, 2017 at 10:20am.

Home EquityIf you own a home in the Denver Metro Area you have likely seen 5-12% appreciation in your property value year over year since 2013.  What does that mean? Well, if you bought your home 4 years ago for $200,000.00 your home could be worth nearly $300,000, depending on your neighborhood's appreciation rates.  While you may be comfortable simply sitting on this increase, there are several ways to improve your financial portfolio utilizing your equity.

  • Refinance to Eliminate PMI: If you currently have a FHA loan you can use the equity in your home to allow you to refinance to reduce or eliminate your monthly mortgage insurance. Then you can enjoy a lower payment each month, giving you more funds to do with what you wish.
  • Home Improvements: Projects that add value to your home can be an excellent investment. These might include expensive maintenance items such as a new roof, HVAC system, or fencing. Other common uses are renovations, upgrading a kitchen or bathroom, expanding the home to add a new room or finishing a basement.  You will be able to enjoy these updates while you live in the home and they will add value to your property when you are ready to move. 
  • Pay off High Interest Debt:  Some home owners prefer to take out a home equity loan to pay off consolidated debt that is currently carrying a high interest rate. The set payment and fixed interest rate will help you pay off debt much faster than if you are only making the minimum payment on credit cards. You will want to avoid accruing any additional debt to make this option really work for you.
  • Pay for College: College expenses continue to increase every year and regulations for student loans have been adjusted to allow for lower amounts of borrowing.  Competitive interest rates can mean a home equity loan may be a good option to help subsidize the cost of college for your children.
  • Line of Credit for Unexpected (or Expected) Life Events: Major life events, whether you need funds for a wedding, a new car or an unexpected medical expense or home repair bills can be good uses for a home equity loan. You can generally borrow more than other methods of financing and the rates will be lower.

Depending on your unique goals, it make make sense for you to obtain a home equity line of credit or a cash out refinance. If you want to discuss these options in a pressure free environment with a trusted lender, I would be happy to connect you with some great lender referrals!

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