The past few years may have some challenges, but there have been some silver linings. Home values have increased, resulting in equity gains for homeowners.
There are many ways that homeowners can choose to use their equity to give themselves a leg up financially, from debt consolidation to college expenses. As a homeowner, you may want to evaluate your personal finances and look for opportunities to benefit from the increased equity you have gained.
Think you might be able to use your equity?
Here are 7 smart ways to consider:
1. Move Up to Your Dream Home
One of the most common ways that homeowners use their equity is to sell their home in order to buy or build something more suitable to their needs. Sellers can use the cash they make at closing for their next down payment OR take out a bridge loan that allows them to borrow that cash before they close to make their down payment on a new home.
2. Home Improvements
Improving your home can further increase its value and your equity, depending on the type of improvements you choose to do.
3. College Costs
This can make sense when the interest rates are lower than other sources for borrowing money for education.
4. Debt Consolidation
Homeowners can save money by using equity to pay off high-interest debt.
5. Long-Term Investments
Some long-term investments, such as a second home or rental property, can be worth drawing on your equity.
6. Wedding
Rather than using credit cards or other high-interest sources to fund a wedding, consider drawing on your home equity to celebrate this long-term commitment.
7. Start a business
Starting a business or investing in a current one can bring a huge return on the investment of your equity.