Looking Ahead and Making Smart Decisions – When is the Right Time for a Home Equity Loan?
If you are like many other American homeowners, the roof over your head represents the single largest asset you own. Whether you are still hanging out in your starter home or enjoying the good life in your dream home, your investment in real estate is substantial, and that is a very good thing indeed.
Over time the value of real estate tends to go up, although not always in a straight line. That means the home you live in today will probably be worth even more tomorrow, and that your wealth can increase in conjunction with the value of the house you love so much.
Unfortunately, the roof over your head is also probably the most illiquid asset you own. Whether your home is worth $100,000 or $1 million, the only way to realize your profits is to sell it. That obviously creates its own set of problems – starting with where you will live.
That is why so many homeowners have been taking advantage of home equity loans and lines of credit to tap the value of their homes without selling the property out from under them. If the majority of your wealth is tied up in your home and you need cash now, taking out a home equity loan can be a smart move indeed.
Of course it is important to know when, and under what circumstances, you should tap your home equity with a loan or line of credit. There are a number of circumstances where such a loan makes sense, but it is important to evaluate your individual circumstances before making a final decision.
One of the most common uses for a home equity loan or line of credit is to finance needed home improvements or repairs. Whether your roof is leaking or you want to add a new deck, a home equity loan or line of credit can give you the money you need to make those repairs and improvements.
If you are financing a home improvement project, a home equity line of credit can be a particularly good vehicle. With a line of credit, you can access the funds as you need them and pay interest only on the amount you borrow. When the project is complete, you can start paying back the loan and rebuilding the equity in your home.
Parents often use home equity loans to pay for the education of their children, and paying college costs is another smart use of these financial vehicles. Whether you use a line of credit to pay for each year of college or a single lump sum loan to finance the entire four years, tapping the equity in your home is an excellent way to reduce the high cost of college loans and get your kids off to the best possible start in life.
No matter what you use the money for, a home equity loan or line of credit can be a smart way to finance your dreams. Whether you use the money to add a new porch, repair a leaky roof or send the kinds to college, tapping the equity in your single most valuable asset is an excellent way to maintain your wealth and secure your financial future. Taking out a loan against the value of your home is not something to be taken lightly, but under the right circumstances it can be a very smart move indeed.
Whether you need to sell your home, refinance or obtain a home equity loan, it is always a good idea to find out how much your home is worth in the today’s market. Contact Mona Koussa for instant market evaluation.