Home equity is on the rise. U.S. home owners with mortgages saw their home equity increase by $766.4 billion from the first quarter of 2016 to the first quarter of this year, an increase of 11.2 percent. The average homeowner saw their home equity increase by $13,400 over that time period, according to real estate data provider CoreLogic.
Home equity is basically the difference between your home’s market value the total amount you owe on your mortgage. There are two basic ways to tap your home equity— through a home equity loan (also called a second mortgage) or a home equity line of credit. A loan can provide money in one lump sum, as opposed to a line of credit that can provide access to money you don’t have to use all at once. With the line of credit, you’ll pay interest only on the money you use, not the entire available line.
One of the most popular uses for home equity is to fund home improvements, although the proceeds from a home equity loan (also called a second mortgage) or line of credit typically can be used for a wide variety of things. Home equity loans and lines of credit can be a lower-rate alternative to borrowing money and are potentially tax deductible to homeowners who itemize (it’s always a good idea to check with your tax advisor about your specific situation).
Is now the time to tap your home equity? Stop in and find out more about home equity loans and lines of credit. Click here to find a PRMI location near you.