There’s some exciting news to report: Nationwide home equity increased 4.8 percent, according to CoreLogic’s Homeowner Quarterly Insight Report.
Home equity is the ratio between how much a home is worth compared to the amount owed.
Year-over-year, the increase accounted for a gain of $428 billion held by 63 percent of individuals who currently pay a mortgage for their homes.
It’s not just in the Seattle, Renton, Tacoma, areas, but all across the country. Additionally, less than four percent of the properties across the United States are at negative equity, according to CoreLogic.
How should homeowners take advantage of their home equity?
First off, homeowners should know that home equity is an incredible asset that can be tapped. For instance, a home equity loan empowers homeowners to repurpose their equity for a lump sum of money.
A home equity line of credit works similarly. The difference lies in how the money is dispersed. When you take on a home equity line of credit, it’s divided into two phases: a draw period and a repayment phase. During the first, your line of credit works like a credit card. It can be used whatever way you see fit. When it’s time to pay the monthly bill, borrowers are only responsible for interest accrued. After this initial phase eclipses, the repayment period begins. Now, you’ll no longer able to draw funds from the line of credit. And you also begin to make payments on both principal and interest portions of the loan.
Another option is a cash-out refinance.
Applicants can borrow more than they owe on the home and cash out the remaining balance. The benefits are two-fold: extra cash and lower interest rates.
Others may take the opportunity to upgrade by selling their home and using the proceeds from the sale to pay off the remaining balance on the mortgage and make a down payment on their next home.
If you are interested in tapping into your equity and live in the Seattle/Renton/Tacoma areas, contact us today!