Home Equity

What to do with all that equity?

Apart from 2022, yearly appreciation in our area has been in the double digits for the last several years, if not longer.

Couple that with the fact you are likely sitting on a rate that is less than half of the going market rate today. What a position to be in!

With likely hundreds of thousands of dollars in equity, is there something you should do? How can you use your equity position to your benefit?

Here are three ideas that you should consider depending upon your particular situation.

Consider a Home Equity Line Of Credit

My dad used to tell me, “it’s cheapest to borrow money when you don’t need it. “ That is sage advice I have used for the last several decades.

With as much equity as you potentially have in your home, getting a line of credit for somewhere between $100,000 – $500,000 for the “just-in-case” situation, could be a very wise move.

Consider it an emergency fund that is only tapped when necessary. Imagine losing a job or having some other financial emergency and needing a top equity. Much harder to do!

Remember, with HELOCs, you only pay interest on the money borrowed, like a credit card. Let it sit idle without drawing down, and you only pay a small yearly service fee somewhere between $50 – $75.

Consider Taking Cash Out

With mortgage rates as high as they are, it would be only a very special circumstance where a cash out refi of your first mortgage would make sense. On the other hand, a fixed rate second would not be something you could consider for a planned, fixed cost, such as:

  • Home improvement
  • Debt consolidation
  • Purchasing an investment or vacation home

Unlike a HELOC, a fixed rate second is a set amount of money that is given to you at time of closing of that loan. Interest starts accruing immediately as do payments.

 Have questions about how to use your equity? Call us today so we can walk you through your options and see what might fit you best.