How to Leverage Your Home Equity

With the summer heat chasing so many Americans inside this year, you might experience increasing dissatisfaction with what you see behind your front door. Are those laminate countertops just a little more hideous than they were yesterday? Did your half bath somehow shrink? And who thought carpet in the dining room was a good idea? If those pesky projects feel like they keep creeping up your priority list, it may be time to consider how using your home equity can help you tackle those annoying home improvement needs.

What Is Home Equity

Your home equity is the difference between your home’s current market value and the total amount still owed on the loan. For example, a property valued at $500,000 with an outstanding mortgage balance of $300,000 has $200,000 in equity. With the present health of the housing market, many homeowners may be sitting on a pile of gold. The upward shift in home values has helped many borrowers build equity without even having to make additional payments on their mortgage, putting these folks in a prime position to take that equity and put it to use.

Where to Begin

A good place to start when considering how to tackle that list of home projects is to first understand exactly how much money is available. Ruoff helps countless homeowners use the borrowing power in their home to improve upon that home and can help you determine how much you can borrow to complete all those projects. If you are unsure of your property’s current value, our loan officers can help you narrow down this number and consider all current debt on your existing mortgage.

What is a Cash-Out Refinance?

A cash-out refinance may allow borrowers to access cash from their home equity. This type of loan can be used to fund various expenses, from paying off higher-interest-rate debt to helping college-aged children through school or funding home improvements.

Benefits of a Cash-Out Refinance

1. Fixed interest rate

2. Lower interest rate than other lending options like personal loans or credit cards

3. Often tax deductible when used to improve upon the existing home

4. One-time, lump sum payout

How to Prioritize Home Projects

Once you have determined your home’s value, it’s time to prioritize your list of projects, as not every item on your wish list may be worth draining your equity. Fixing up high-traffic areas like laundry rooms, mud rooms, and bathrooms is usually a safe place to get some bang for your buck—and don’t forget the kitchen, arguably the most utilized room in the house.

Not only will these improvements enhance your resale value, but you will also immediately reap the benefits as you delight in utilizing these shiny new areas every day. These remodels do not have to cost a fortune, either, as there are plenty of easy kitchen improvements, such as upgrading flooring, outdoor space renovations, or additions; roofing repairs and replacements are additional areas where tapping into your home’s equity can pay off in real time.

Think about which areas of your home bring the most overall value to both your family and potential homebuyers down the road should you decide to sell. Those types of projects warrant borrowing against your hard-earned equity and will likely end up paying off in the short and long run.

Get Started

So, if you have long wanted to start on home improvement projects or are looking for a way to pay down debts, a cash-out refinance may be the solution for you. Contact one of our loan officers to help you determine your home’s worth and devise an effective plan to maximize your equity.