Daily Dupaco

Wednesday, April 26, 2017

Build equity in your home and reap the benefits

Your house can be a powerful financial asset.

As you continue to make payments on your mortgage, you build equity in your home, which opens the door to other financial opportunities.

Build equity in your home and reap the benefits.The Basics of Home Equity


Your home’s equity is the difference between your home’s market value and the balance of any mortgages against your home. It’s the part of the home’s value that belongs to you, not the lender.

Equity should increase over time as you pay the mortgage balance down, says Chris Hurley, mortgage/consumer lending consultant at Dupaco Community Credit Union’s Cedar Heights branch in Cedar Falls, Iowa. You can calculate the equity in your home with Dupaco’s home equity calculator.

Home Equity Line of Credit (HELOC)


Using Your Home’s Equity


You can borrow against the equity in your home with a Home Equity Line of Credit, or HELOC. A revolving line of credit is established, and it can be drawn upon and paid down by the homeowner for a set period.

“It’s a lot like a credit card with a mortgage attached to it,” Hurley says. “Once you have the HELOC in place, you can really use it for anything—purchasing a vehicle, paying for a vacation, helping with children’s school costs or even paying off other debt.”

Dupaco members can transfer funds from their HELOC to a checking or savings account through Shine Online Banking, over the phone, in-person at a branch or by using checks tied directly to the loan.

How to Increase Your Home’s Equity


When you build equity in your home, you also can increase the capacity of your HELOC limit. Here are some ways you can increase your home’s equity faster to get the most out of your line of credit:

  • Make additional payments: Find a way to make additional payments on your mortgage loan. “A great way to do that with Dupaco is to get set up on automatic biweekly payments,” Hurley says. “By doing this, you will make one full additional payment each year.”

  • Boost your payments: You also can round up your monthly mortgage payments to pay off your loan—and build equity—faster. A free Dupaco Money Makeover can help you review your entire budget to find ways to increase your mortgage payments. “The additional funds would be applied toward the principal balance,” Hurley says.

  • Increase the value of your home: “Most home-improvement projects should have a positive impact on the value of your home,” Hurley says. “But many experts believe the best projects for increasing your home’s value are kitchen or bathroom remodels, replacing old appliances with new and adding an extra bedroom.”

By Emily Kittle

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