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What Does the Surge in Home Equity Mean for You?

An illustration of houses next to a chart with increasing results moving up and to the right

Buoyed by low mortgage rates and unprecedented buyer demand, home values across the United States increased at double-digit rates over the past 2 years.  As a result, most homeowners saw the equity in their homes increase as well, producing a positive impact on their overall financial situation.  Encouragingly, Vermont was no exception to this trend. According to a report published by the real estate research company ATTOM, Vermont has the second-highest equity-rich housing in the United States, just behind Idaho.

A 2021 U.S Home Equity & Underwater Report showed that in the fourth quarter of 2021, 41.9% of mortgaged residential properties in the U.S. were considered equity-rich. Even better, only one in thirty-two mortgaged homes were seriously believed to be underwater in the fourth quarter of last year!  Strong equity gains can serve as a built-in buffer against unexpected financial hardships or can be proactively used to improve one’s home or investment portfolio. 

Interested in learning more?  Here are four proven strategies that you can use to benefit from this recent surge in home equity values…

How Can a Surge in Home Equity Benefit Homeowners?

Cash-Out Refinance

If you’re not really considering selling your home, you can use the rising property values to your advantage in many ways—one of which is a cash-out refinance. This allows you to refinance into a new mortgage for more than what you owe and receive the difference back in cash.  From there, you can use the money in any way you want such as paying off your student loans or credit card debts to save hundreds or thousands of dollars in financed interest.

Fund Home Renovations

Another smart option is to invest in home improvement projects to make it more comfortable for you and your family and at the same time, increase your home’s value. Whether you want to renovate your kitchen and bathrooms, repaint your house, or upgrade your home appliances, you can always borrow from yourself by taking out a home equity loan to finance additions, improvements and renovations.

Add to Your Retirement Income

If you’re 63 or older, you can tap into your home equity by applying for a reverse mortgage. This type of loan will provide you with access to tax-free income that you can use to cover expenses during your retirement years.  Unlike a traditional mortgage, a reverse mortgage does not require the borrower to make regular monthly payments and all interest costs are simply added to the loan balance which is then paid off when you sell the home, move out or pass away.       

Invest in a New Home

Though mortgage rates are going up, they are still considerably lower than historical averages. This, along with a red-hot real estate industry, means that your property is more likely to sell for a higher price.  Now is a great time to consider leveraging your new-found equity by selling your property with an experienced Realtor.  Increased equity can enable sellers to have money left over after paying off their existing mortgages, which can then be used as the down payment on a new, more expensive property.

Is Now the Time to Cash Out or Invest in More Real Estate?

The answer to this question depends on your priorities and financial situation.  Since 1985, we’ve helped thousands of clients buy and sell real estate in Northwest Vermont.  Our goal is to provide you with the local insight, information and resources necessary to make your purchase and/or sale a comfortable, informed and enjoyable experience.  Contact us today to receive a complimentary market analysis on your property or to discuss how you can partner with the Lipkin Audette Team to help achieve all of your real estate goals.

 

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