Julie D'Arcangelo - Coldwell Banker Residential Brokerage



Posted by Julie D'Arcangelo on 7/3/2018

Home values continue to rise. Many people use their home equity in order to get a bit more financial security. The home equity line of credit can have many different benefits for you. From home improvement projects to a much-needed vacation, you can get the funds that you need for whatever you wish. Turn to your home equity with some careful thought, however. You could end up owing more than your home is worth, which defeats the purpose of tapping into your home equity to begin with. 


Make Your Decision Smart


Your home equity can be a good thing to tap in to if youíre not planning on spending like crazy. Maybe you just want a little extra cash on hand for emergencies. Youíll be prepared for anything unexpected. This could be a smarter decision than just blowing a bunch of money on a vacation, for example. 


Some smart things that you can use your home equity for include:


  • Home renovations
  • Emergency funds
  • College education funds
  • Cash advance


These ideas are investments that can help you to achieve other goals. You should be sure that youíre able to pay the money back. These projects or financial endeavors are much more suited to smart spending than just randomly spending money, buying a car, or other things that will put you in serious debt.


Home Equity Fluctuates


As the market changes, the amount of home equity that youíll have to tap into does as well. The state of the housing market can actually dictate to you how much money youíll be able to get. If the market isnít good, you could end up in the negative financially, so do your research. 


How To Get Your Home Equity


There are a few ways that you can draw from your homeís equity. The first rule that you should understand is that you cannot borrow more than 80% of what your home is worth. Take a full remortgage your home, giving you the full 80% amount that your home is worth in order to take a lump sum. Alternatively, you can take a cash-out refinance where you set the amount of money youíd like to take out of your homeís equity as you refinance the home. You can also take out whatís called a ďhome equity line of credit,Ē which allows you to use the amount of your homeís worth as a credit card of sorts. You borrow money as you need it.     


The biggest issue with refinancing is that of planning. Itís important to know why youíre refinancing and what youíre planning on doing with the money. Used wisely, home equity can really be a great financial tool.





Posted by Julie D'Arcangelo on 6/6/2017

If youíre a newer homeowner, odds are you donít really ďownĒ your home outright. Rather, you likely have equity in your home.

In this article, weíre going to talk about what home equity is, how to use it to your advantage, and things you should avoid using your home equity toward.

 What is home equity?

Unless youíre one of the lucky few who paid for their homes in cash, you probably took out a mortgage. As you pay off that mortgage you build equity.

Home equity is essentially the value of a property that a homeowner has at their disposal due to paying back part or all of their mortgage.

However, thereís another factor at play in home equity, and thatís market value.

Since the housing market fluctuates, the value of your home does as well, and as a result, your home equity changes with the market value of a house. That might sound worrying, but the good news is that due to something called appreciation.

In the same way that the cost of living tends to rise each year with inflation, so do housing prices. However, appreciation isnít the only factor at play in the valuation of your house. As your home ages, it will likely need some renovations, which could decrease the home value.

Generally speaking, however, your equity achieves a net gain as you pay your mortgage and the value appreciates.

Increasing equity

Now that we know why equity can be so beneficial as an asset, letís talk about ways to build it.

The best way to build home equity is to repay your home loan. However, more than simply repaying, youíll want to repay in the fewest number of years to avoid paying more in interest. The longer you take to pay your mortgage, the more interest accrues that could have been used toward other investments.

The second way to increase equity is one we mentioned before--market fluctuation--namely appreciation. To improve the chances of getting a high appraisal of your home, itís important to keep up with maintenance and make smart renovation choices that will have a high return on investment.

Using home equity

The best use of home equity is to leave it be and increase its value over time. However, that isnít always possible for all of us. Since many of us need to move before repaying our full mortgage, equity allows homebuyers to use their equity toward their next mortgage.

Another option is to take out a home equity loan or home equity line of credit. Ideally, youíll only use these loans if youíre planning on using the loan money to increase the value of the home via home improvement projects.

Borrowing against your home equity does come with risks. Since you are putting your share of your home on the line, there is a chance of your home being foreclosed on if you donít repay the home equity loan. However, lenders typically seek other methods of repayment or settlement before foreclosure.







Julie D'Arcangelo
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