The Do’s And Don’ts Of Tapping Your Rising Home Equity

If you bought a home recently, it may already have increased in value. Equity growth goes hand-in-hand with pride of ownership (and fun stuff like tax breaks) when it comes to homebuyer goals, so say a big, “Yay!”

“Nearly 91,000 homeowners regained equity in the first quarter of 2017, according to real estate data firm CoreLogic’s latest housing report, said “Since the end of the most recent housing crisis, 9 million owners in total have regained equity, the report notes. About 63 percent of all homeowners have seen their equity increase since the first quarter of 2016, with the average owner gaining about $13,400 between then and the first quarter of 2017.” According to Frank Martell, president and CEO of CoreLogic, that’s the “largest increase since mid-2014.”

But, before you go making plans for all that equity, either by doing a cash-out refinance (if possible and prudent) or getting a home equity loan, take a pause. That money may be best left right where it is. If you still want to tap that equity, here are some of best – and worst – ways to use it.

Home renovations

When your home has equity, it can be tempting to use it for home renovations, which, presumably, will further raise your home value – or at least make your home prettier or more functional. Knowing which renovations pay you back is key to making smart choices. Review Remodeling magazine’s Cost vs. Value Report, which “compares average cost for 29 popular remodeling projects with the value those projects retain at resale in 99 U.S. markets.” You can then take your research further, viewing data for your regional area. This will help you decide if that $50,000 kitchen is a good investment, or if that attic renovation you were considering will be a bust from an ROI standpoint.

A new car

That fancy new car is calling your name, right? Does it make sense to use some of your home equity to finance or buy it outright? Ask yourself this: Is this a car you can’t afford without using your home equity? Can you afford to pay the difference in your current monthly payment and what will be your new payment – plus the monthly cost of the car?

“During the housing bubble, consumers used home equity borrowing to pay for everything from boats and gambling junkets (clearly bad) to cars and kitchen renovations (not so bad), said “The problems these homeowners experienced during the financial crisis and recession taught us that even some ‘not so bad’ spending should be scratched from our list of acceptable uses. So, while we used to say that financing a car with a HELOC was OK, we no longer believe that. Besides, auto loans are now one of the few types of consumer loans that are cheaper than home equity loans or lines of credit.”


Adding on to a home can be a great way to make it more livable, especially if the space is inadequate for your family. The Cost vs. Value Report can be useful here, too. You might be surprised to learn that a midrange bathroom addition typically only pays back an average of 53.9%. But, if you bought an older home that only has one bathroom, adding another could have a much higher ROI that makes the addition worth it.

When it comes to larger undertakings, “Studies show that nearly all of the cost of a mid-range two-story addition may be recovered at the time of sale,” said The Spruce. “The key here is ‘may be recovered,’ as there is no predicting the real estate market years in advance. While this might seem like a ‘no-brainer,’ it needs to be mentioned. More space means higher heating and cooling costs, more windows to wash and gutters to clean, increased property taxes, and more house to clean. Even though additions offer the potential for higher cost-value ratios than other renovation projects, you still may not recover the full cost of the addition when you actually sell.”


That European cruise or trip to Machu Picchu sounds like a great idea, especially because you’ve got some cash to pay for it with the rising equity in your home. But consider this: You may be paying back the money you spend on that vacation long after you return home.








Written by Jaymi Naciri

Before You Sell Your Home

10 Things To Ask Your REALTOR
Before You Sell Your Home

When looking for a great real estate agent, there are many things that you’ll have to consider. Your ideal agent will be knowledgeable about your local market, experienced, and have a plethora of connections to navigate you through the home sale process. Here are some important questions that you should ask your Realtor before you decide to sell your home:

  1. In which neighborhoods do you primarily work?Sell Your Home

This is important because you’ll want a realtor that is experienced in the specific market in which your home is located.  The more knowledgeable your agent is about the neighborhood you’re selling in, the better, because they will be able to price your house according to the comps and first-hand information that they glean from being familiar with the area.

  1. What percentage of your clients are buyers versus sellers?

You want to make sure your agent has buyers for your home at the ready, but you also want to make sure they know how to list a home for sale to get you the best price.

  1. Will I be working with just you, or any other associates?

This is important so that you know what to expect when it comes to working with your agent. If your agent has an assistant or anyone working under them that you can contact when they are not available, you should find out as soon as possible.

  1. Do you work full-time or part-time?

Some agents work full time and some work part time, so you’ll want to find out what to expect. Obviously, if your agent is working part time because it’s their side job, they may be more difficult to contact at certain times. If this is the case, you’ll want to figure out a set time that you can call them during the week.

  1. How many homes have you closed in my neighborhood?

If your agent has closed a good number of homes in your neighborhood, you can assume that they have the experience to get the job done. Having this track record is a good sign that your agent knows the neighborhood well and has the right contacts.

  1. How many other sellers are you representing?

When you ask your agent this you might want to note that the busiest agents are usually the most efficient. If your agent has a lot on their plate they know how to multitask, have processes in place and always manage to get things done.Realtor selling your home

  1. Is your license in good standing?

You can check your agent’s certification yourself with your state’s Department of Real Estate, as many states provide this information online. This can give you peace of mind if you are nervous about hiring an agent and getting started.

  1. How many years of education and experience do you have?

Typically, experience and a record of continued education is a sign of a seasoned agent that you can count on. Of course you can also find a great agent that does not have extensive education, but it certainly helps to know in your initial search.

  1. Are you also a broker?

Agents that are also brokers have taken additional education classes and have earned a broker’s license. A broker may have more experience and may hold responsibility over other agents that are working under them, and they may be an effective person to sell your home.

  1. Can you provide me with the names and phone numbers of past clients who have agreed to be references?

By doing this, you can gain valuable insight from past clients so you can learn more about your agent. This can create a greater level of comfort when working with your agent after hearing the advice and comments from real people that they worked with.

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