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Leveraging Your Equity
Even with the recent slow down in the market, property values are still significantly higher than they were last year. Many homeowners have no idea how much equity they have in their home and similarly, are not sure what opportunities that equity provides. I often hear people say how they could never afford to buy a new home because they are too expensive now. However, most people I speak to do not fully understand their borrowing potential when leveraging their equity.
For example, I had a client who purchased their semi-detached home many years ago for $170,000. We recently sold their home for $340,000, which meant they had some $200,000 in equity to play with. Instead of rolling that entire amount into a new mortgage, they withheld a portion to pay off two vehicles and some other short-term debt. They purchased a home for $600,000 and put 20% down from the sale proceeds. Their new mortgage was $480,000, but as they’d paid off their vehicles and credit lines, the total monthly debt payments of the household went down.
You don’t even have to move to realize those benefits. Speaking to your mortgage specialist about a potential refinance could accomplish the same goal of lowering total monthly debt payments, even though your mortgage has increased. If you want to learn more about leveraging your equity, contact me at any time!
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