Take Advantage of Increased Home Value

July 25, 2022

Home prices are surging across the country leaving many homeowners looking for ways to tap into their increased home equity to better position themselves financially. If your home’s value is high, now could be a smart time to take advantage to set yourself up for future success, too.

To help homeowners do just that, the residential mortgage experts at BayFirst have compiled a list of ways to maximize the value of your home while home prices hover at record highs.

1. Consider Downsizing. Even in a hot real estate market, you will typically pay less for a smaller home in the same area. So, if the kids are off to college or you’re just not utilizing the square footage of your current home, now could be a prime opportunity to downsize. Selling your house for top dollar could provide a large down payment (which will help minimize monthly mortgage payments) or allow you to purchase your next home outright without a mortgage at all. Just be sure to find your new home before selling your current home in today’s market, where inventory is low.
2. Get a Home Equity Loan or Home Equity Line of Credit (HELOC). Now is a great time to consider borrowing against your property to plan for future expenses or complete home renovations that could increase your property's value even more. Both home equity loans and HELOCs have their risks but are generally considered affordable ways to borrow against your equity and avoid a refinance in a rising rate environment. Be sure to explore both options with an expert before you get started.
3. Reduce Your Mortgage Payments. Are you currently paying private mortgage insurance (PMI)? Many lenders require for buyers who put less than 20% down until the homeowner has at least 20% equity in the property. If you are currently paying PMI and you suspect the value of your home is up, check with your lender to see if you qualify for the early removal of a PMI.
4. Try a Cash-out Refi: Because they allow owners to withdraw a portion of their home’s equity while refinancing into a new mortgage, cash-out mortgages are popular for those looking to pay off credit card debt, invest in other properties, or cover the cost of college. However, because mortgage rates are currently on the rise, you’re less likely to refinance for a more attractive rate, especially if you’ve had the mortgage for a short amount of time. But, if you’ve had your mortgage for a while and you’re planning to stay in your current home for the foreseeable future, it doesn’t hurt to compare rates and explore your options.

One thing we know about the housing market is that it is unpredictable, which means home values will always fluctuate. If you are considering ways to maximize the current value of your house, now is the time to talk to an expert about building wealth through equity. Fill out the form below to get started. As always, we are here to help.