Prioritizing yourself is important. It’s also a good idea to keep up with your home loan health. Much like medical professionals may recommend getting an annual physical, mortgage professionals might support an annual homeownership review. What is that?
An annual homeownership review is typically a quick, bite-size analysis of your home’s value and potential equity. Equity can be approximated by comparing the original purchase price of your home against its current estimated value. Keep in mind that estimated value differs from appraised value, and an appraisal will determine the actual value of your home. Overall, this type of review is helpful in identifying prospective financing options to consider, and common ones are outlined below.
Tapping into your home equity
If the value of your home has increased and/or you’ve paid enough of your current loan down to have positive equity, you might be able to use refinancing as an opportunity to cash out some of that equity.
Many homeowners utilize a cash-out refinance to pay off other debts such as car loans, credit cards, and student loans. It can also be ideal for financing home improvement projects. Or, you could put the funds toward purchasing another property like an investment or second home. Always remember to consult your financial advisor on the consolidation of short-term debt into long-term debt.
Selling your current home and using its equity to upsize or downsize
Life is filled with change and sometimes that involves where you call home. If your current home isn’t meeting your needs anymore, you may want to consider making a move while taking advantage of any equity you’ve built. You could apply it towards the down payment, closing costs, or other moving expenses.
Refinancing to secure more favorable terms
Aside from capitalizing on equity, there are other possible benefits of refinancing. It might allow you to lower your interest rate and monthly payment. Or, reducing your loan term could allow you to save on interest over the life of your loan and pay off your home early.
If you’re interested in prioritizing your home loan health with an annual homeownership review, an Evergreen Home Loans™ loan officer can help.