What is equity, and how do you capitalize on it?
Equity is a combination of a few different financial factors: the down payment you put on the house, the debt you pay down on your mortgage, any improvements to your home, and how much your home appreciates on the market. Today, many people have a lot of equity in their homes, and they’re wondering how they can capitalize on it. Here are a couple of ways that you can cash in on the equity you have in your home:
1. Sell the house. Chances are you’ll get way above market value when you sell. That means if your market value is $500,000, you could very well get anywhere from $25,000 to $100,000 more than that. And if you’re like many people who are on the fence about selling their homes because they’re concerned about being able to find another to buy, that’s why we have our next option…
2. Cash-out refinance. If you want to stay in your home but still capitalize on your equity by, investing it in the stock market, using it to make home improvements, or pay off a lot of debts, you can do a cash-out refinance. To do this, you’ll need to consider a couple of things. First, what does your home appraise for? The reason why a cash-out refi isn’t as ideal as outright selling is that the bank will determine what your home is worth, not the market. Keep in mind that your loan officer can only give you 80% of loan-to-value. That means if your home appraises for $500,000, they’ll give you a loan of up to $400,000. For a cash-out refi, interest rates are currently around 3.3%.
If you own your home and you think you have some equity that you’d like to take advantage of, you need to get an equity evaluation. We’ll assess what improvements you’ve done to your home, what the market appreciation is like in your area, and what your payoff is. Based on that information, we’ll help you figure out how much equity you can get out of your property. We can even give you some ideas about how to use it.
If you have any questions about equity or how to capitalize on it, don’t hesitate to reach out to us via phone or email. We’d love to give you a free equity evaluation of your home so that you know what options you have.