Four Ways You Can Use Your Home Equity

If you’re a homeowner in Colorado Springs, chances are your equity has grown substantially over the last few years. Equity builds as local (and national) home values rise and as you gradually pay off your home loan. Given the recent surge in home prices, you’ve probably gained more equity than you realize.

According to the latest Equity Insights Report from CoreLogic, the average homeowner now possesses more than $274,000 in equity. This level of equity can aid you in achieving specific objectives. As Bankrate details in a recent article:

“While the pandemic created serious challenges, the silver lining for anyone who owned a home was the sizable equity gain. Understanding how home equity works, and how to leverage it, is important for any homeowner.

Here are a few ways you can utilize your home equity effectively in the context of Colorado Springs real estate.

1. Purchase a Colorado Springs Home That Fits Your Needs

If your current home no longer suits your needs, it might be the right time to consider moving. Whether you're looking for a larger home in Colorado Springs or a smaller one, your equity can be utilized toward a down payment on a home that better fits your evolving lifestyle. A Colorado Springs real estate agent can help determine the amount of equity you possess and how best to apply it when purchasing your next home.

2. Reinvest in Your Current Colorado Springs Home

Should you wish to modify your living space without moving, renovations are an excellent option. Home improvement projects allow you to tailor your Colorado Springs home to your preferences and requirements. However, consider the potential long-term benefits certain upgrades could bring to your home’s value, particularly given the specific demand in the Colorado Springs housing market. A local real estate professional can provide invaluable advice on which improvement projects should be prioritized for the best return on your investment when you eventually decide to sell.

3. Pursue Personal Ambitions

Home equity can also be a stepping stone to achieving your lifelong dreams. This might mean investing in a new business venture, planning for retirement, or financing an education. While it’s not advisable to use your equity for frivolous spending, employing it responsibly for meaningful purposes can significantly enhance your quality of life.

4. Understand Your Options to Avoid Foreclosure

Today, the number of foreclosure filings remains relatively low. However, there are still homeowners who unfortunately, undergo the foreclosure process. If you’re encountering financial difficulties, understanding your options and the role your equity can play is crucial. Equity can serve as a financial safety net during unexpected challenges or circumstances that may disrupt your timely mortgage payments.

Freddie Mac explains it this way in an article:

“If exiting your home is the best option for you, selling with equity may be a good choice. When selling with equity, you are using the proceeds from selling your home at a higher price than the amount you owe on your mortgage to pay off your remaining mortgage debt.”

Bottom Line

Your home equity can be a game changer when it comes to investing in your needs, pursuing your ambitions, and potentially aiding you during challenging times. If you're unsure about how much equity you have in your Colorado Springs home, let's connect to help you start planning your next steps. 719-434-7525

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