Current homeowners looking for a bigger home may have to wait a little longer before moving. That’s because available housing inventory is scarce, according to. Specifically, the number of homes for sale in 2023 fell in 21 of the 50 largest metropolitan areas compared to this period in 2022.
Fewer available houses, higherand significantly higher mortgages combined to drastically reduce the options for potential home buyers. In this environment, options are limited, especially for current homeowners whose mortgage rates are near historic lows. For these owners, it may make less and more sense to move to improve and renovate their current homes.
A major home renovation orMaking it more comfortable and enjoyable while you wait for market conditions to change can increase your home’s value. Fortunately, there are several ways owners can pay for these improvements
Start exploring your home equity options here now to see how much you qualify for
Why Homeowners Should Use Their Home Equity Now
In today’s market, many homeowners would be better served living and working in their current home for the day they can finally buy something else. Home renovations, esp, can dramatically increase the value of your home. There are two ways owners can finance these projects:
Home equity loan
using aOwners can withdraw a lump sum from the equity they have built up in their home
By the amount you paid for your mortgage balance combined with the current value of your home. So if you paid off $100,000 of your mortgage and your home went up in value by the same amount, you’d have $200,000 of equity to use. Lenders usually let you borrow amount that
Home equity loans are generally lessUnlike personal loans and credit cards, however, you have to pay interest on the full loan amount. That said, a home equity loan pays interest When used for IRS-qualified home improvements and repairs, it makes for a cost-effective way to finance these special types of projects.
Explore your home equity loan options here now to see if it makes sense for you.
Home Equity Lines of Credit (HELOCs)
Similar to home equity loans, although there are some differences. Unlike a home equity loan, a HELOC works like a credit card by providing the borrower with a revolving line of credit.
This can be beneficial because borrowers only pay interest on the amount they use – not on the amount they’re approved for (as they do with home equity loans). said,Usually variable, so the rate an owner receives after their application is approved may not be the rate they keep in the long run.
HELOCs also benefit from the same interest The IRS Explains “the loan must be secured by the taxpayer’s principal home or second home (qualified residence) and meet other requirements.”Home equity loans do. “Home equity loan interest and lines of credit are deductible only when the borrowed funds are used to purchase, construct, or substantially improve the taxpayer’s home that secures the loan.”
Home equity loans and HELOCs aren’t currently the only viable options for homeowners to finance major home projects and renovations.Senior homeowners (age 62 and older), and High interest rates can be a worthwhile option for owners.
With a cash-out refinance, owners take out a new mortgage loan for more than their current loan. They then pay off the first loan with the second and take the difference between the two as cash. If this sounds beneficial to you, start exploring your refinancing options now to learn more.