Home Equity: Top 3 Uses in a Pandemic
If you are a homeowner, it's time to perk your ears up. Interest rates are low, but homes have maintained excellent values, making it an opportune time to take advantage of the equity you have built in your home to fund your home improvement projects, consolidate debt or fund your upcoming life events. If you’re needing more than $10,000, a home equity line of credit is an excellent option you should explore.
Here are the top three ways our members have used their home equity during the global pandemic:
1. Debt Consolidation
Debt can be a stressor constantly looming in your mind. The most common type of debt we see is credit cards. Sure, it seemed like a good idea to open all those store cards for 25% off that day's purchase, but now the five different credit card payments at varying high interest rates feels overwhelming. But beyond plastic, people also combined other debt, like auto and personal loans, under one roof with one payment to simplify life. That's something we can all get behind right now!
Why this works well: Take all those payments and lump them into ONE fixed payment using your home's equity. It'll be more consistent and manageable, giving you a clearer path to truly get control of your debt.
2. Home Improvement Projects
With more time at home, it's no surprise that many had the itch to do some revamping. More than any other year, people craved a backyard oasis. We saw a major uptick in pool installations to fulfill staycation dreams. Some swapped out tropical island vacays for a quartz island kitchen remodel. Of course, replacing ACs and roofs still remained popular ways to use home equity, as well.
Why this works well: Most large home projects easily exceed $10,000, typically making it more cost effective to leverage your home's equity instead of another higher interest rate option. Plus, these investments will likely increase a home's value, so it's a win-win.
3. Life Events
No matter what happens in the world, life still moves forward. Weddings get planned, college tuition is paid, and families still adopt children. These uncertain times have also left many wanting the comfort of having a line of credit to pull from in case of emergency. Your home's equity can help with the financial burden of all of these things, and much more.
Why this works well: When using a home equity line of credit, you only pay on what you've actually used. The flexibility makes it perfect for those times when you might need a little now, and some more later down the road.
We highly suggest looking into our Hybrid Home Equity, which allows maximum flexibility to fit your needs. Curious how much money you might be able to borrow from your home’s equity? You just need to estimate the current value of your home and your outstanding mortgage balance to get an estimate.