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Kalamazoo Home Tip:3 Ways To Use Your Home Equity Loan

Your Digital Home Advisors

by zac folsom

If you’re a homeowner, odds are your equity loan has grown significantly over the last few years as home prices skyrocketed and you made your monthly mortgage payments. Home equity loan builds over time and can help you achieve certain goals. According to the latest Equity Insights Report from CoreLogicthe average borrower with a home loan has almost $300,000 in equity right now.

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. A real estate professional is the best resource to help you understand how much home equity you have and advise you on some of the ways you can use it.  Here are a few examples.

1. Buy a Home That Fits 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 loan 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. A real estate advisor can help you figure out how much equity you have and how you can use it toward the purchase of your next home.


2. Reinvest in Your Current House

According to a recent survey from Point, 39% of homeowners would invest in home improvement projects if they chose to access their equity. 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 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, a report from the National Association of Realtors (NAR) shows refinishing or replacing wood flooring has 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 loans 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.

Reasons to use Home Equity in Kalamazoo 

There are tons of reasons borrowers favor home equity loans, including their cost, the amounts you can borrow upfront, and the regular monthly payments.
In Kalamazoo, these are the main benefits of Home Equity:

1. Relatively lower interest rates

Interest rates for most types of debt have spiked in recent months. But in general, all types of loans secured by your home offer some of the lowest interest rates, such as compared to credit cards or personal loans.
Currently, home equity interest rates are as low as 5 percent, while credit card interest rates can range well into the double digits or even 20 percent. Moreover, 10 to as much as 20 percent is easy on home equity loans, and the risk doesn’t change throughout the life of the loan.

2. Potential tax benefits

Home equity loan interest may be tax deductible in case you re taking out a loan to finance home improvements.

Where to Go From Here

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.