Everyone is talking about home prices going up – but what does that mean for you if you already bought your home 3-4 years ago? First it means you’re lucky and/or a smart cookie. It also means you’re probably sitting on quite a bit of equity. Home values increased 7% between February 2016 and February 2017. It’s time to put that equity to work for you in bettering your overall financial strategy.
Drowning in Debt?
You’ll want to consider what other debts you have right now. Are you paying a lot of interest on credit cards or student loans? You can look into using your equity to make a significant dent in that debt. This is done through a cash out refinance. Aren’t interest rates insanely high right now though? NO! Yes, that was in all caps with an exclamation point. Contrary to the panic the media has been causing, interest rates are still low. Let’s take a break for a fun little exercise. Go ask your parents what the interest rate was on their first mortgage. Ok, we’re all on the same page now. Interest rates are still historically low. So you should take advantage of paying less interest on mortgage money than credit card or student loan money – and transfer that debt.
What about your Retirement Strategy?
What about your retirement? Did you make a significant withdrawal against it for your down payment? Or worse, have you not started investing yet? Pulling some cash out from your house to diversify your assets is a very financially savvy move. It’s never too early to start planning ahead by starting an IRA. Life insurance policies are also a great savings vehicle. You’ll get a solid return on your money this way, money you may not have even realized was available to you to invest. After we discuss your refinance options, I will connect you with a financial advisor to get your investment strategy started.
Are you paying Mortgage Insurance?
Lastly but most obviously – if you put less than 20% down, you need to immediately look at what can be done to fast track the removal of your mortgage insurance. Back when you purchased the home, if you used FHA financing, we’ll need to explore a refinance to remove that MI. If you did a conventional loan with private mortgage insurance, we have several options to get your payment reduced.
So if you already purchased your home and have been smirking at all the news about prices going up and up – this is just another reason to smile. Reach out so I can explore what you can do to take advantage of your increased home value.