Personal finance

How to tap into the added value of your home [Personal Finance]

Chances are you’ve seen the value of your home increase significantly over the past year. A white-hot real estate market, fueled by low interest rates and the need for more space for many families, has driven up demand and home values ​​across the country.

If you plan to stay in your current home, this is great news, as its increased value opens up several financial options for you to take advantage of the ever-low rates and growing equity in your home.

Here are some options for maximizing the value of your home and reinvesting in your financial future.

Open or use a home equity line of credit

A home equity line of credit, or HELOC, works the same way as a credit card, but the interest rate is lower than most credit cards.

With a HELOC, you have the option of using it as a variable interest line of credit, based on the equity in your home, and making interest-only payments over a 10-year drawdown period. or you can lock in a fixed rate and duration. .

A HELOC can be a good option for a home improvement or renovation project, to consolidate higher interest credit card balances, or even to pay for a vacation.

Reinvest with a remodel

With prices skyrocketing and inventory levels still low, many homeowners are embarking on renovations to their current homes, and for good reason – they can get the design and comfort they want and crave. need while reinvesting in their property.

If you are planning to remodel or renovate your home, an installment mortgage is a great choice. With a home equity installment loan, you receive a lump sum up front to spend on your project(s), and then you have predictable, fixed payments and terms over an agreed period to pay it back.

You can use the money to pay for one large project or a few successive projects over a short period of time, whichever works best for you.

Lower your mortgage payment and get the cash you need

Another great use of your home equity that has tons of flexibility is a cash refinance. Even if you already have a HELOC, you can still take advantage of a cash refinance to get the cash you need.

A cash-out refinance replaces your current mortgage with a larger mortgage – at a lower interest rate – and gives you access to the cash that is the difference between the two mortgages.

You can use the money for anything you want, like paying off a student loan, paying for a child’s wedding, or any other need. It’s your money to spend as you see fit.

Whichever option you choose to maximize your home’s value and equity, it’s important to have a plan. If you’re considering paying for a wedding, vacation, or consolidating debt, make sure you understand how much you need, then talk to your banker or mortgage lender to determine the best option.

If you are planning to renovate your home, make sure you get at least three estimates and have a firm agreement on the timing, the duration of the estimate (material costs also increase) and do your due diligence to make sure the contractor you choose is a reputable company that keeps its promises.

Susan List is Senior Vice President, Head of Consumer Lending for WSFS Bank, serving in various leadership roles within the bank for over 23 years.