If you’re a homeowner, odds are your equity has grown significantly over the last few years as home prices skyrocketed.
Equity is the current value of your home minus what you owe on the loan. Because there was a significant imbalance between the number of homes available for sale and the number of buyers looking to make a purchase over the past few years, home prices appreciated substantially.
With careful consideration, as your home equity builds, it can help you achieve certain goals. As you weigh your options, especially in the face of inflation and talk of a recession, it’s important to understand your assets and how you can leverage them. Here are a few examples of how you can use your home equity.
1. Buy a home more suited to your needs
If you no longer have the space you need, it might be time to move into a larger home. Or it’s possible you have too much space and need something smaller. No matter the situation, consider using your equity to power a move into a home that fits your changing lifestyle.
If you want to upgrade your house, you can put your equity toward a down payment on the home of your dreams. And if you’re planning to downsize, you may be surprised that your equity may cover some, if not all, of the cost of your next home.
2. Reinvest in your current house
This is a great option if you want to change some things about your living space but you aren’t ready to make a move just yet.
Home improvement projects allow you to customize your home to suit your needs and your sense of style. Just remember to think ahead with any updates you make, as some renovations add more value to your home and are more likely to appeal to future buyers than others. For example, things like a new AC, an updated kitchen and appliances, or a replacement roof are always going to be more reliable investments that boost your home's bottom line and have a high-cost recovery. Lean on a local professional for the best advice on which projects to invest in to get the greatest return on your investment when you sell.
3. Pursue your personal goals
In addition to making a move or updating your house, home equity can also help you achieve the life goals you’ve dreamed of. That could mean investing in a new business venture, retiring or downsizing, or funding an education. While you shouldn’t use your equity for unnecessary spending, leveraging it to start a business or putting it toward education costs can help you achieve other lifelong goals.
The Bottom Line
Your equity can be a game changer. If you’re unsure how much equity you have in your home, let’s connect so you can start planning your next move. I'd be happy to help.
Corcoran Cayman Islands