While there are those who understand the real-estate market well, others see it as a…
One way to access money as a homeowner is to refinance their home and use their equity to pay for things like a home renovation.
Below we have compiled a list of the most common reasons a person will tap into their homes equity. We will explain the benefits and possible risks associated with these options.
1) Home Renovation
Home renovations are one of the most common reasons that people get a refinance. Most of the time the funds are used for minor cosmetics such as getting new countertops or updating fixtures. As time goes by some aspects of a home become old and outdated. Like wood panels or single sink restrooms. Some of the more extravagant renovations include adding a pool or an additional room to the existing structure.
2) Debt Consolidation
Debt consolidation is another common reason people will pull equity from their home. This would be to payoff credit cards with high interest rates or an auto loan.
A good way to utilize equity is to invest in yourself. Education such as college and certification programs aren’t cheap but can result in gaining a higher pay or job opportunities.
Here is where things get a little dicey. There are multiple ways that people can invest money they receive from home equity. This ranges from stock market investments to investing in real-estate. There are many risks to investing money like a downturn in the market.
5) Personal Expenses
It can be agreed on that using equity for personal expenses such as a boat or toy is probably the worst reason to refinance a home. One of the many reasons for our financial crisis over a decade ago was from the purchase of personal expenses that people could not reasonable afford. Toys can be fun, but is it worth losing a home over? I don’t thinks so
If you are considering using the equity in your home, reach out to us for a free consultation by phone or email below: