Capitalize On Your Home Equity
If you bought your home a few years ago, paid your mortgage installments on a regular basis, and hopefully the market value of your house appreciated year over year, then it’s time for your house to start paying you back from the cash accumulated in your home equity you’ve built.
Home equity is the asset value of your house, minus your outstanding debt (mortgage), and depending on how many years you are into your mortgage, your equity can translate into a massive amount of cash.
However, if the equity in your home doesn’t appreciate in value, then it is doing nothing to increase your net worth! The rate of return on the equity in your home will remain at zero if you continue in this way, and your wealth will stay the same. To double your money, you need to make use of what’s locked up in your home equity.
How does home equity increase?
Homeowners can build a large amount of equity on their property by remembering to make their mortgage payments on time. Similarly, when the market value of houses appreciate, the equity of your home increases. This may occur due to the construction of a nearby park, entertainment center, school, or other value-adding facilities. You can even increase your home equity through renovation projects. However, home improvements cost money, and you should be able to recover this amount.
To take advantage of this opportunity, you need to know how home equity works in the financial markets, and the best ways to use it. To help you out, we at MassMortgageGroup.com have put together a few tips on how to access and use your home equity to your benefit.
How to access your home equity?
To utilize your equity, you first need access to it. For this, you can:
a. Refinance your existing mortgage and obtain a new mortgage
b. Take a Home Equity Line of Credit so you can draw money as and when you need it
c. Keep the existing mortgage and take a second mortgage if the investment justifies - with your equity as collateral
What are the investment options?
If you have your mind set on using your home equity for investment, there are various types of investment options available to you to multiply your money. Here are a few you can try out:
a. Use home equity toward the down payment to purchase an investment property.
b. Secure lending, (so-called private lending), which can be used for both first and second mortgages.
c. Capitalize on existing or starting up a business.
d. Other types of investments such as savings, investment accounts, stock markets, mortgage syndication, Pre-construction projects, etc. are also available depending on the risks you are willing to take.
Home equity benefits and risks
Utilizing your equity for investment has taxation benefits, in the sense that investors can write off the interest paid on the borrowed amount. However, you need to note that all investments have some sort of risk and have to be chosen and customized based on your risk tolerance level.
It is highly recommended to seek expert advice to know the pros and cons of different investments as well as the legalities associated with each one. Experienced mortgage specialists are a good source of assistance in some of the investment options mentioned above. Moreover, their advice comes free!
If you are looking for an expert to talk to about home equity and how to use it to your advantage, get in touch with the MassMortgageGroup.com, the residential and commercial mortgage professionals in Vaughan, Ontario. You can call us at (905) 707-9595.
MassMortgageGroup.com houses excellent senior mortgage advisers, with years of dedicated experience. When it comes to borrowing funds through private lending, we can connect you with a network of over fifty specialized lenders. Our mortgage services include financing private first, second, and third mortgages, various commercial mortgages, construction financing from custom made houses to multi-units development projects, equity loans, and much more.