Thursday, March 22, 2018
Make your home's equity work for you
It was a homeowner’s nightmare.
After a pipe burst in front of their house, a young couple was on the hook for some $20,000 worth of repairs.
“If they would have had equity in their home, they could have borrowed against it for that emergency,” says Amanda Durham, consumer/mortgage lending consultant at Dupaco Community Credit Union’s Hillcrest Road branch in Dubuque, Iowa.
Your home’s equity is the part of the home’s value that belongs to you, not the lender. And you can borrow against your equity with a HELOC—using it for everything from home repairs to debt consolidation.
“Any additional equity you have is going to benefit you when you’re ready to sell your home or need to borrow against it,” Durham says. “I recommend a Home Equity Line of Credit to every homeowner for emergencies. You never know what’s going to happen.”
Boost your home’s value
Your equity increases as you pay the mortgage balance down. You also can boost your home’s value by making smart home improvements.
A Consumer Reports survey of millennials found that a “modern/updated kitchen” topped the list of ideal home features. And you don’t have to spend a lot to reap the benefits.
“For as little as $5,000, you should be able to add a new suite of appliances, as well as a new countertop and flooring, resulting in a fresh, coordinated look. Applying a fresh coat of paint to the walls or cabinets, and updating the hardware, can also breathe new life into the space,” Consumer Reports advises.
Whenever you update your home, strive for an open, flexible floor plan—the second-most desired feature in a home, the survey found.
When it comes to any home improvement project, it’s critical to establish a budget before you start.
“Things cost more than you expect,” Durham says. “Even after you get a bid, budget for a little more so you’re prepared for unexpected costs.”
By Emily Kittle