Top Reasons Your House Expired

Top Reasons Your House Expired

There’s nothing more discouraging than having your listing expire. You’ve gone to all the trouble of staging your home, spending weekends and evenings running out the door to accommodate last minute showings and have nothing to show for it. The good news is there are real reasons why your home didn’t sell. Understanding these reasons can help you do things differently when you relist.

• Condition – Most home buyers are able to see beyond slight imperfections, but it’s important to offer a clean, neat home free from chipping paint, clutter and debris.

• Photographs – Most of today’s buyers start their home online, you must showcase your home through media first in order to entice the buyers to make an appointment.

• Price – One of the worst things a seller can do is “test the waters.” Many buyers will write off the home because they view you as unrealistic. After a listing has been on the market for a while, buyers then assume there is something wrong with the home, when in fact the sellers are just waiting for an offer.

• Poor Exposure – Homes don’t sell themselves, buyers need to see the home. Make showings easy by using a lockbox and allowing your agent to hold open houses.

• Wrong Agent – Not all agents are alike. The agent needs to be actively involved in the sale, not simply waiting for offers to land in their inbox.

Avoid the frustrating experience of having your home listing expire by understanding ahead of time the possible issues which can cause the listing to sit on the market. Knowing the possible pitfalls reduces the chance of an expiring listing and helps you sell your home for a great price and terrific terms.

Contact me and find out why you need a pro-active real estate agent representing your home sale.

The Internet Isn't Your Agent

The Internet Can’t Replace Your Agent 

We live in the information age; the Internet offers advice on every topic and real estate is no exception. With more and more home buyers starting their home search online, they are bombarded with advice and information – it can be easy to think that you can learn everything you need to know just by reading articles online.

The truth is your real estate agent does much more than answer your questions and open doors with a special key. A professional real estate agent will be there every step of the way. They have the experience necessary to navigate the complicated home buying process and solve common hiccups that present themselves in every real estate transactions.

Your real estate agent is a local professional. They will start by presenting themselves to the buyer’s agent as someone who will work with them to see the transaction through to a successful conclusion. They have a network of professionals who will work as a team to help you through the process. These include such professionals as: lenders, title reps, escrow officers, transaction coordinators, home inspectors, contractors and handymen, among others.

Most importantly, your agent is your ally in the home buying process. They negotiate on your behalf – armed with experience and understanding of customary charges, costs and terms.

They will ensure that the price you pay for the home is fair for the condition and neighborhood. They will negotiate repairs, if needed and make sure you are protected with the proper contingencies.

The Internet offers lots of great information, but the most important step you can take when buying a new home, is hiring a local professional real estate agent. Their knowledge and expertise can’t be found by reading an article or two online.

Contact me today with your questions, concerns, or anything else.

4 Reasons to Sell this Fall

4 Reasons to Sell this Fall

Traditional lore says that the best time to list your home for sale is spring and if it hasn’t sold by the end of summer, you’re out of luck. Along the same lines, homeowners across the country are often advised not to list in the fall and wait until after the holidays to list. The truth is that a great home will sell at any time of year and in fact there are some very good reasons to list in the fall, while everyone else is busy doing other activities.

4 Reasons to Sell this Fall

1.     Less Competition – As mentioned above, most sellers list in spring so as a seller, fall provides you less competition which increases the opportunity for buyers to view your home.

2.     Serious Buyers – Home buyers in fall often have a timeline to move before the holidays. They tend to take the home search seriously and move to write offers faster and avoid wasting time.

3.     Curb Appeal – Fall is a beautiful time of year and homes always seem cozier as the weather turns. Fall colors in the trees and the scent of baking entice buyers to feel “at home” which encourages offers.

4.     Closing is Easier – The pace of home sales slows during the fall; as such lenders can move faster and the process tends to take less time.

The last and best reason to sell this fall is that it’s the right time for you and your plans. Regardless of whether you are relocating, moving up or scaling down, if this is the right time to sell, then this is the best time to sell.

Items to Check Before a Home Inspection

Items to Check before a Home Inspection

Selling a home can be a stressful time, there is so much to think about; keeping the home clean, heading out on a moment’s notice to accommodate last minute showings, not to mention planning a move. It’s natural to feel overwhelmed.

Then you get that great offer and you’re under contract. You’re relieved until you realize there’s a home inspection coming. Even a home meticulously maintained can have hidden issues. The good news is that you can prepare for the home inspection and make sure you pass with flying colors.

Items to Check before a Home Inspection

·      Doors, windows, cabinets and drawers – check that they slide smoothly

·      Run water in sinks, tubs and showers – snake any that drain slowly

·      Evidence of water leaks – Garage ceiling, under sinks, around water heaters, etc.

·      GFIs – check your local code and put GFI plugs where required

·      Smoke and Carbon Monoxide Detectors must be in working order

·      Gutters and Roof – replace any missing roof tiles and clean gutters

·      HVAC – Consider a HVAC servicing to replace filters and check for problems

·      Water Heater – is it properly strapped and vented

·      Deferred maintenance – anything that has been neglected should be addressed before the home inspection

The best defense is a good offence. This is true in home inspections too! The best way to ensure you have a great home inspection is to have a pre-listing home inspection. It could be the best couple hundred dollars you can spend – uncover the issues before the buyer does.

What to Repair in Your Home Before You List

What to Repair in your Home Before you List

A lot of money goes into buying a new house so it is understandable if a seller feels hesitant investing even more money to fix up their current  house prior to selling. However, sellers may not realize that some of the issues they live with everyday and consider minor, such as the hallway light switch or the kitchen sink that has plumbing issues, may actually be considered major to home buyers. These issues may even prevent buyers from making an offer on a home or making a lower offer. It’s crucial to keep your house presentable and in good shape before you list it on the market.

That being said, read on to find out what repairs you might want to consider before you list on your house on the market.

Roof Problems

A roof is one of the most important components of a home, protecting all that is underneath. Additionally, roofs are major expenses to replace.

Therefore, it is imperative to keep the roof well maintained and free of damage and leaks. Issues like water and sun damage, clogged gutters, and rotting will lead to bigger issues if not fixed timely. Tending to these items immediately will help prevent further damage and help present the home well.

Poor Maintenance

Minor issues such as damaged flooring, paint chipping, and old carpeting can be easily fixed to give your home a renovation. Your goal is to make your home appealing so start by replacing anything that is heavily worn and adding a fresh coat of paint. And these minor upgrades can be inexpensive because you’ll most likely see a return on investment.

Plumbing

Plumbing problems can result in minor or major issues and it is very important to take care of these issues right away as they can lead to further problems. Bigger problems such as water damage can lead to mold and easy fixes to leaky faucets can be replaced inexpensively.

Wiring

Electrical problems can cause a wide variety of problems. Smaller fixes such as faulty switches, missing wire nuts, or damaged junction boxes can be fixed with a good electrician. Replacing a circuit breaker might be needed if they don’t match the amperage of your home. Some repairs are obvious to see and others aren’t so it’s a good idea to run a pre-inspection of your house before listing. After, review it with your realtor because they can advise on which ones are the first priority.

Maximizing Your Home's Value

Maximizing Your Home Value

Are you ready to list your home for sale? One of the first questions you might have is, “how can I maximize my home value?” Every seller wants to get the best possible price for their home; fortunately there are ways to make sure your potential buyers see the true value of your property and allow you to receive top dollar when you sell.

• Clean, declutter, depersonalize – The first thing every home seller needs to do is take a critical look at the home and clear out the distractions. Cleaning the home/yard is a must. Remove anything that can draw a buyer’s eye away from the beauty of the home.

• Redecorate – Professional home stagers will often advise clients to remove and/or replace furnishings. Even if you love oversized furniture, it can make the room look small; consider renting more neutral pieces during the listing.

• Perfect Condition – No home is perfect, but before you list take care of deferred maintenance issues. Replace missing roof tiles, repaint any area that is worn or dirty, and re-sod your lawn; remember; buyers want to know the home has “good bones.”

• Update carefully – It’s not important for home sellers to have the latest countertops or custom bathtub to get a good value for their home. Often the home updates/improvements sellers undergo cost more than they would lose in sales price without them. If your home is very dated, consider a seller credit instead to allow the buyer to choose their own upgrades.

Homes retain value based on a few factors; the location, the condition and the features. Before you list, speak with your agent, then make any necessary repairs and changes to ensure you get the best value for your home when you sell.

Home Improvements with High ROIs

Home Improvements with High ROI

Is your house a little dated? Do you want to make some improvements or upgrades but also want to make sure that you get the best bang for your buck if you decide to sell? Not all home improvements bring a good return on investment when selling, so unless the improvement is simply for your own style and enjoyment, choosing projects with higher ROI just make sense.

Home Improvements with High ROI

• Add square footage – The best return on investment is adding space. Converting an attic or basement into a family room, adding a room or bathroom or even installing a garden room or outside kitchen will bring solid returns when selling.

• Bathroom and Kitchens – Remodeling a bathroom or kitchen will always bring more than their cost when selling. Create simple and soothing environments where a future owner can imagine themselves. Avoid heavy period-style cabinetry and surfaces.

• Doors and Windows – Upgraded doors and windows can really add impact to a room. Not only do current options save energy, they come in a wide variety of styles and finishes to accentuate the space.

• Garage Doors – If you have an old or weathered garage door, this is a relatively inexpensive way to dress up your home.

• Paint – Fresh paint is inexpensive and makes the home appear new and modern. Choose calm tones which compliment any décor.

Regardless of whether you’re considering a weekend project or a major remodel, understanding the return on your investment can help you make the best choice for your project. Home improvements can be costly and if you’re considering listing your home for sale in the future, make sure you can recapture your cost.

Seek A Consultation with me prior to doing any major renovations for selling your home,

Negotiating for Top Dollar

Negotiating for Top Dollar

Selling your home? Every seller wants to make sure they sell their home for the best possible sales price. Getting top dollar for your home is not as complicated as you might think. By using a simple negotiation strategy, you can make sure receive the best price for your home listing.

The first step in a negotiation strategy begins before you even list your home. Choosing the right real estate agent and listening to their advice regarding home value is important. Choose a realistic list price; over-pricing to “test the market” is not only a waste of time, but as the listing ages on the market, buyers are more likely to write lowball offers.

Once you receive an offer; review and respond to all reasonable offers. Never assume that a buyer isn’t serious just because the offer is lower than you’re willing to accept. Make a reasonable counter offer; if you are motivated to lower your price, you can, but if not, countering with a full price number is acceptable also. Just make sure your price is fair for the actual value of the home.

Consider compromising on terms. Often you can negotiate a higher sales price if you are flexible on other terms. Does the buyer need extra time to close/move? Would they like to have the garage shelves or patio furniture? Win-win situations do not have to involve compromising on price.

All negotiations are different, but by setting the proper stage and calmly navigating through offers, you can make sure you sell your home for the best possible sales price. Getting top dollar for your home is a simple strategy of fair pricing and unemotional negotiations.

Should Sellers Offer A Home Warranty?

Should Sellers Offer Home Warranties?

If you are selling your home, one of the most common requests with the buyer’s offer is to pay for a home warranty. As a seller, you might be wondering if it’s something that’s worth the expense. Some agents suggest that the seller purchase a listing warranty as well as part of the sales process. Understanding the benefits of a home warranty is the first step in deciding if it’s worth the cost to you, the seller.

A home warranty is a policy which covers the cost of repairs to a number of critical systems in the home. While coverage varies, most cover electrical, plumbing, heating, air conditioning and appliances. Some optional coverage could include pool and spa, roofing and code protection among others. In the event that a home buyer has a problem with any of the covered systems, the warranty would send a service person out to make the repairs for only the policy deductible – usually between $65-100 per problem.

The home warranty provides peace-of-mind to the buyer that if an undetected problem shows up after the close; their out-of-pocket cost is limited to the small deductible. While this does not negate the need for a professional home inspection, it can push a transaction to close with buyers who are nervous about unexpected problems. As an additional bonus, most warranty companies offer a free listing warranty which covers unexpected issues during the listing; often saving the home owner hundreds of dollars in repairs arising from the inspection.

Offering a home warranty in the listing is one way to demonstrate to potential buyers that the condition of the home is important to the seller as well. You take maintenance seriously and they can rest assured that they are making a good investment.

Tips For Selling in Summer

Tips for Selling in Summer

Summer has traditionally been the best time to sell a home. Not only do many families take advantage of moving when the kids are out of school, but in climates where winter weather is unpredictable or severe, the warmer months make it easier to be away for showings. With more homes on the market, how can you maximize your potential for a great offer among the options? Fortunately, you can take a few steps to ensure your home stands out from the crowd.

Tips for Selling in Summer

• Control the Climate – The first thing a buyer will notice when they walk into a home is the temperature. If the weather is warm and humid, it’s critical you keep the home cool. A larger air conditioning bill is a small price to pay for a top dollar offer.

• Let in the Sun – It might be tempting to close the blinds to save money on air conditioning, but bright, sunny rooms are always more appealing; leave enough open to showcase natural light.

• Extend Outdoors – Today’s lifestyle includes the outdoor areas and more and more homes feature outdoor living and dining areas. Regardless of your home’s features, maximize the impact of your yard with furniture, BBQs and manicured landscaping.

• Spring Clean – A fresh, decluttered home with a lighter, seasonal color scheme will be visually appealing to your buyers. Replace dark pillows, linen and accents with softer colors which make the rooms seem larger.

The summer selling season is here. Make sure your home is dressed for success. Welcoming outdoor spaces and bright sunny rooms combined with inviting an air conditioned rooms will ensure you get the best possible offer.

Should You Get An Appraisal Before Listing Your Home For Sale?

Should You Get An Appraisal Before Listing Your Home For Sale?

The most important thing on every seller’s mind is the listing price. No one wants to leave money on the table by pricing a home too low. At the same time, pricing the home too high will also likely result in lost dollars either from wasting valuable time on the market or once stale, selling for below market value in desperation.

Getting a professional appraisal ahead of time might seem like the solution, but is it?

An appraisal can be defined as an opinion of value at a given moment in time. If you are in an ascending market where listings are selling quickly, the appraiser can only use closed sales as a reference in the appraisal, so you might be tempted to list too low for the market, but not accounting for the increase in sales activity and prices. Contrarily if the market is slow and prices are declining, an appraisal received in May could be too high for the erosion of prices seen over the summer, and your listing will be overpriced for the reality of the neighborhood.

More than just these scenarios, a pre-listing appraisal means nothing to the buyer or their lender. They will still use market data to write their offer and their lender will order a new appraisal regardless. While you can reference your appraisal in negotiations, the buyers will still only offer what the property is worth to them and you might miss out on a great deal by trying to stick to your price.

In the end, a pre-listing appraisal is probably a waste of time and money. Your agent has access to the latest market data and can show you the same comparable properties the appraiser would use. Find a good local agent you trust and work with them to price your home correctly.

The Cost of Home Staging

The Cost of Home Staging

Have you wondered if you should consider professional staging for your home before you list it for sale? Most of us have wandered into new home developments and enjoyed the ambiance of a perfectly styled model home. Of course we would all like our homes to give that same impression to potential home buyers, but what would that cost? Understanding the options available to you for staging can help you decide what, if any, professional staging makes sense for you and your budget.

What is Staging?

First it’s important to understand what professional staging includes. The best answer is, “it depends”! Staging can be as simple as a consultation or as involved as removal of existing furniture and replacing it with designer furnishings.

Needless to say, the cost of the two extremes are drastically different. Most homeowners who hire professional stagers are somewhere in the middle.

Staging begins with a tour of the room or home. Often simple placement of furniture can make a huge impact. The stager might also bring in elements to enhance the décor, such as colorful pillows, lamps, wall art or carpet. These are loaned to the homeowner for the duration of the listing.

Cost of Staging

Most stagers charge a flat rate for the initial consultation; this ranges from about $250-500, depending on the size of the home. If the homeowner determines that they also need furnishings, these are rented by the month and can range from $300-500 per room, per month. Additionally, there is often a minimum number of months required, typically 3 months.

Professionally staging your home is one option home sellers have to ensure their home is seen in its best light. Just as buyers fall in love with model homes, staging your home can bring a modern feel and entice buyers to write the offer. The best way to start is with your agent, to understand your market, competition and needs.

As I hold a Home Staging Certification, I do include staging as part of our marketing consultation. Make your appointment today!

3 Must-Do's Before Listing Your Home For Sale

3 Must-Do's Before Listing Your House for Sale

Before you list your home for sale, it’s time to do a little work around the house – to prepare and make sure your home is seen in the best possible light. These “must-do” items are about showing your home to buyers as one which is cared for and ready for them to add their own brand of home to the space. Taking a little time up front can mean thousands of dollars as buyers start writing their offers.

3 Must-Do’s Before Listing Your House for Sale

1.      Declutter, Depersonalize and Clean – This is the time to take spring cleaning seriously, in any season. Clear out all unnecessary items from the home; closets, drawers, extra clothes, old unwanted furniture. Donate to charity, hire a dumpster or rent a storage space; buyers will look in every space and open all drawers and cabinets, make sure your home seems spacious. Spend some time to depersonalize by removing excessive pictures and hide heirlooms. Finally, deep clean every space top to bottom.

2.      Address Deferred Maintenance – Make small repairs or hire a handyman to take care of problems which could appear during the home inspection. Replace caulking, fix broken windows and screens, replace light bulbs and freshen up and clean grout; buyers want to see a home that is cared for with “good bones.”

3.      Go for Curb Appeal – Spend some time in the yard. Trim bushes and trees, clean and repair hardscape and make sure there is adequate lighting. Welcome your buyers with seasonal flowers or décor and place a fresh mat by the front door.

Before you put that sign in the front yard, spend a little time and elbow grease to make sure you welcome your potential buyers with the best version of your home.

Why do Homes Listed with Professional Real Estate Photos Sell Quicker and For More Money?

Why do Homes Listed with Professional Real Estate Photos Sell Quicker and For More Money?

If you are planning to list your home for sale, you probably already know that you need to prepare your home for the market. The point is to create the most attractive, welcoming version of your home to entice buyers into the home and encourage offers. Your listing needs attention also! Professional photography is the best way to attract those buyers and to ensure you get the best possible price in the shortest timeframe.

Most buyers now start their home search online. Online listings with professional photography receive significantly more views than those without. Buyers tend to linger on the site longer as well.

Professional photographers do far more than snap pictures with the right lens. They understand how to create the right emotional response in the viewers. They have experience working with listings and homes and normally they specialize in real estate.

You already know that homes must be staged to some degree for sale. Buyers must be able to envision themselves living in your home. Photography is about lighting and angles. A good photographer can bring out the best in your home by using these techniques in their shots. Professional pictures can play with light and position to allow your home to appear spacious and bright.

Professional photography is no longer reserved for luxury property listings. More and more agents are seeing the value of beautiful pictures. Make sure your home stands out among the sea of listings as potential buyers sort through properties online. Professional photography will help you sell your home faster and for a higher sales price than those without. Present your home in the best possible light to attract those buyers and encourage them to visit and write you an offer.

Photos are included for all my sellers! You never have to worry about cutting corners when it comes to my professionalism and expertise when marketing your home. Reach out today to make an appointment!

The Home Selling Process

The Home Selling Process

Are you planning to sell your home? Regardless if this is your first time as a home seller, or maybe you’ve sold many homes, understanding the selling process can assure you that things are going smoothly. Successful transactions don’t just happen; it takes experience and professionals to navigate from staging to closing.

Who Do You Need?

• Real Estate Agent – Before you start, meet to discuss your home sale. Your real estate agent should have experience and put your interests before their own (contact me to find out more).

Timeline For Your Home Sale

• Meeting With Your Agent – Your agent will tour your home and discuss your market value (including a comparative market analysis), timing and financial goals in order to create a custom plan for selling your home.

• Preparing Your Home For Sale - Typically even a dated home can be spruced up with small changes in furniture placement, fresh paint, new lighting and/or minor repairs.

• Listing Your House - Once your home is ready for buyers, you will list your home and your agent will implement their marketing plan.

• Offers - Once offers are received, you will meet with your agent to review them together and determine how to respond.

• Escrow Process For Sellers – The buyers will complete funding requirements, obtain an appraisal and home inspection. As the seller you will also complete any conditions you’ve agreed to, such as repairs or maintenance items.

• Closing – Once all conditions have been completed, you will close the sale and receive the proceeds.

The sales process is a series of steps that you and your agent will take together. Knowing what to expect, and when, can alleviate the uncertainty you might feel as a seller. Each sale is unique which is why a professional and experienced real estate agent is imperative to guide you through the transaction.

Contact me today to get started!

Take Advantage of Your Home Equity: A Homeowner’s Guide

Take Advantage of Your Home Equity: A Homeowner’s Guide 

Homeownership offers many advantages over renting, including a stable living environment, predictable monthly payments, and the freedom to make modifications. Neighborhoods with high rates of homeownership have less crime and more civic engagement. Additionally, studies show that homeowners are happier and healthier than renters, and their children do better in school.1

But one of the biggest perks of homeownership is the opportunity to build wealth over time. Researchers at the Urban Institute found that homeownership is financially beneficial for most families,2 and a recent study showed that the median net worth of homeowners can be up to 80 times greater than that of renters in some areas.3

So how does purchasing a home help you build wealth? And what steps should you take to maximize the potential of your investment? Find out how to harness the power of home equity for a secure financial future.

WHAT IS HOME EQUITY?

Home equity is the difference between what your home is worth and the amount you owe on your mortgage. So, for example, if your home would currently sell for $250,000, and the remaining balance on your mortgage is $200,000, then you have $50,000 in home equity.

$250,000 (Home’s Market Value)

-           $200,000 (Mortgage Balance)

______________________________

             $50,000 (Home Equity)

The equity in your home is considered a non-liquid asset. It’s your money; but rather than sitting in a bank account, it’s providing you with a place to live. And when you factor in the potential of appreciation, an investment in real estate will likely offer a better return than any savings account available today. 

HOW DOES HOME EQUITY BUILD WEALTH?

A mortgage payment is a type of “forced savings” for home buyers. When you make a mortgage payment each month, a portion of the money goes towards interest on your loan, and the remaining part goes towards paying off your principal, or loan balance. That means the amount of money you owe the bank is reduced every month. As your loan balance goes down, your home equity goes up.

Additionally, unlike other assets that you borrow money to purchase, the value of your home generally increases, or appreciates, over time. For example, when you pay off your car loan after five or seven years, you will own it outright. But if you try to sell it, the car will be worth much less than when you bought it. However, when you purchase a home, its value typically rises over time. So when you sell it, not only will you have grown your equity through your monthly mortgage payments, but in most cases, your home’s market value will be higher than what you originally paid. And even if you only put down 10% at the time of purchase—or pay off just a small portion of your mortgage—you get to keep 100% of the property’s appreciated value. That’s the wealth-building power of real estate. 

WHAT CAN I DO TO GROW MY HOME’S EQUITY FASTER?

Now that you understand the benefits of building equity, you may wonder how you can speed up your rate of growth. There are two basic ways to increase the equity in your home:

1)    Pay down your mortgage.

We shared earlier that your home’s equity goes up as your mortgage balance goes down. So paying down your mortgage is one way to increase the equity in your home.

Some homeowners do this by adding a little extra to their payment each month, making one additional mortgage payment per year, or making a lump-sum payment when extra money becomes available—like an annual bonus, tax refund, gift, or inheritance.

Before making any extra payments, however, be sure to check with your mortgage lender about the specific terms of your loan. Some mortgages have prepayment penalties. And it’s important to ensure that if you do make additional payments, the money will be applied to your loan principal.

Another option to pay off your mortgage faster is to decrease your amortization period. For example, if you can afford the larger monthly payments, you might consider refinancing from a 30-year or 25-year mortgage to a 15-year mortgage. Not only will you grow your home equity faster, but you could also save a bundle in interest over the life of your loan.

2)    Raise your home’s market value.

Boosting the market value of your property is another way to grow your home equity. While many factors that contribute to your property’s appreciation are out of your control (e.g. demographic trends or the strength of the economy) there are things you can do to increase what it’s worth.

For example, many homeowners enjoy do-it-yourself projects that can add value at a relatively low cost. Others choose to invest in larger, strategic upgrades. Keep in mind, you won’t necessarily get back every dollar you invest in your home. In fact, according to Remodeling Magazine’s latest Cost vs. Value Report, the remodeling project with the highest return on investment is a garage door replacement, which costs about $3600 and is expected to recoup 97.5% at resale. In contrast, an upscale kitchen remodel—which can cost around $130,000—averages less than a 60% return on investment.4

Of course, keeping up with routine maintenance is the most important thing you can do to protect your property’s value. Neglecting to maintain your home’s structure and systems could have a negative impact on its value—therefore reducing your home equity. So be sure to stay on top of recommended maintenance and repairs.

HOW DO I ACCESS MY HOME EQUITY IF I NEED IT?

When you put your money into a checking or savings account, it’s easy to make a withdrawal when needed. However, tapping into your home equity is a little more complicated.

The primary way homeowners access their equity is by selling their home. Many sellers will use their equity as a downpayment on a new home. Or some homeowners may choose to downsize and use the equity to supplement their income or retirement savings.

But what if you want to access the equity in your home while you’re still living in it? Maybe you want to finance a home renovation, consolidate debt, or pay for college. To do that, you will need to take out a loan using your home equity as collateral.

There are several ways to borrow against your home equity, depending on your needs and qualifications:5

1)    Second Mortgage - A second mortgage, also known as a home equity loan, is structured similar to a primary mortgage. You borrow a lump-sum amount, which you are responsible for paying back—with interest—over a set period of time. Most second mortgages have a fixed interest rate and provide the borrower with a predictable monthly payment. Keep in mind, if you take out a home equity loan, you will be making monthly payments on both your primary and secondary mortgages, so budget accordingly.

2)    Cash-Out Refinance - With a cash-out refinance, you refinance your primary mortgage for a higher amount than you currently owe. Then you pay off your original mortgage and keep the difference as cash. This option may be preferable to a second mortgage if you have a high interest rate on your current mortgage or prefer to make just one payment per month.

3)    Home Equity Line of Credit (HELOC) - A home equity line of credit, or HELOC, is a revolving line of credit, similar to a credit card. It allows you to draw out money as you need it instead of taking out a lump sum all at once. A HELOC may come with a checkbook or debit card to enable easy access to funds. You will only need to make payments on the amount of money that has been drawn. Similar to a credit card, the interest rate on a HELOC is variable, so your payment each month could change depending on how much you borrow and how interest rates fluctuate.

4)    Reverse Mortgage - A reverse mortgage enables qualifying seniors to borrow against the equity in their home to supplement their retirement funds. In most cases, the loan (plus interest) doesn’t need to be repaid until the homeowners sell, move, or are deceased.6

Tapping into your home equity may be a good option for some homeowners, but it’s important to do your research first. In some cases, another type of loan or financing method may offer a lower interest rate or better terms to fit your needs. And it’s important to remember that defaulting on a home equity loan could result in foreclosure. Ask us for a referral to a lender or financial adviser to find out if a home equity loan is right for you.

WE’RE HERE TO HELP YOU

Wherever you are in the equity-growing process, we can help. We work with buyers to find the perfect home to begin their wealth-building journey. We also offer free assistance to existing homeowners who want to know their home’s current market value to refinance or secure a home equity loan. And when you’re ready to sell, we can help you get top dollar to maximize your equity stake. Contact us today to schedule a complimentary consultation!

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

Sources:

1.      National Association of Realtors -
https://www.nar.realtor/blogs/economists-outlook/highlights-from-social-benefits-of-homeownership-and-stable-housing

2.      Urban Institute -
https://www.urban.org/urban-wire/homeownership-still-financially-better-renting

3.      Census Bureau -
https://www.census.gov/library/stories/2019/08/gaps-in-wealth-americans-by-household-type.html

4.      Remodeling Magazine -
https://www.remodeling.hw.net/cost-vs-value/2019/

5.      Investopedia -
https://www.investopedia.com/mortgage/heloc/home-equity/

6.      Bankrate -
https://www.bankrate.com/mortgage/reverse-mortgage-guide/