My observation of increasing debt load is a part of many conversations I have been having over the past several months.  It’s a tempting strategy, when vulnerable to an economic downturn, to tap into one of the huge benefits of owning property – your available equity!  With equity comes the temptation to dip into it if a large expense or possible investment arises. There are many strategic ways to use your equity without ruining any personal financial advances you have made.  The most crucial step you need to take is to fully understand your options for tapping into that money and the associated risks.

Simply put, your home equity is the market value of your home relative to any loan balances remaining.  There are two main ways to utilize this value.

–   Getting a home equity loan provides you with a lump sum of money that you pay off in monthly installments, generally over five to 15 years.  As with any loan, you will be required to pay interest on the amount, but it is usually a fixed rate.

–  Choosing to use a line of credit instead offers similar benefits, but instead of receiving the money up front, you are given a pool you can draw from as needed.  With this option, the lender provides a maximum borrowing limit and you can choose to use it or not until it is reached.

Before dipping into your home equity in either way, it is important to understand the possible consequences.  In both instances, your home is used as loan collateral. This means if you are unable to make payments on the loan for any reason, the lender can sell your property or take your home in foreclosure.  Additionally, there will likely be closing costs and fees you have to pay in association with the loan.

So you see, I am not just in the business of sales and marketing.  I prefer to be regarded as your real estate Advisor!

Remember, average sale prices and market activity may not be entirely reliable when considering real estate investments in more mature communities.   Your best way to get an assessment of your home and its current market value is by calling on me to help and provide you with a free home evaluation. I really want to help you in any way I can.

Whether you are buying, selling, or just daydreaming about a new home, I can help you make an informed decision.  Give me a call, text or an email at 780-695-0542, tina@tinafournier.com.