There have been a lot of headlines reporting on how homeowner equity (the difference between the current market value of your home and the amount you owe on your mortgage) has dramatically increased over the past few years.
How can equity help a household?
Having equity in your home can dramatically impact your life. Equity is like a savings account you can tap into when you need cash. Here are three good reasons to consider using your equity.
1. You’re Experiencing Financial Hardship
Equity gives you options during difficult financial times. With equity, you could refinance your house to get cash to ease the burden.
If you’re in this position, even if you can’t get a modification, the equity allows you the option to sell your house and walk away with your equity.
2. You Need Money to Start a New Business
We’ve all heard the stories about how many great American companies started in the founder’s garage. What we might not realize, however, is that the garage (along with the rest of the home) supplied the start-up money for many of these companies in the form of a refinance.
If you’re passionate about an idea you have for a new product or service, the equity in your home may enable you to make that dream of a cupcake factory a reality.
3. You Want to Invest In a Loved One’s Future
It’s been a long-standing tradition in this country for households to help pay their children’s college tuition, wedding expenses, or assist in their first home purchase.
It’s safe to assume a percentage of that money likely came from home equity.
What You Need to Know
The forced savings you can earn from making a mortgage payment enables you to build wealth through home equity. That equity can come in handy in both good and more challenging times. Making the decision to tap into equity can be scary, but your real estate agent is always here to help!