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Make the Most of Being Home Rich

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Homeownership can be a financial grind. From the mortgage to the taxes to the maintenance costs, rarely a day goes by without some major expense occupying at least a small part of your mind” — Paul Ebeling

Thanks to escalating home prices, approximately 46-M homeowners were sitting on a record $7.3-T in equity at the end of Y 2020, according to mortgage technology and data provider Black Knight. That works out to an average $158,000 in equity per homeowner.

So, if you are a home owner you have several ways to boost your finances, here is how:

  • Reduce your insurance costs. If it is time to buy or renew your homeowners insurance, getting quotes from multiple insurers can help you score the best deal and avoid overpaying. Comparison shopping also can do wonders when you are trying to save money on car insurance.
  • Wipe out high-interest debt. If you have been using credit cards to cover the extra costs of being a homeowner, those high interest rates can be a real drag. Consider rolling all of your debts into a single, lower-interest debt consolidation loan to erase your debts more quickly and affordably.
  • Generate more income in the stock market. You do not need the proceeds of a hefty cash-out refi to get in on today’s stock market fun. A popular app helps you invest in a diversified portfolio using little more than “spare change” from your everyday purchases.

Tapping into the equity in your home.

Today’s rates are almost certainly lower than they were when you !st got your mortgage, refinancing is a great way to save money. Black Knight recently found that with mortgage rates as low as they are, 14.1-M homeowners could save up an average $287 a month by refinancing.

In a cash-out refi, you replace your current mortgage with a new, larger one — and take the difference in cash. The new loan pays off the existing mortgage and is then paid off in monthly installments.

Lenders generally allow you to borrow 70% to 80% of your home’s value in a refi. If your home is worth $400,000 and your lender approves an 80% cash-out refinance, you would receive as much as $320,000. If you still owe $200,000 on your first mortgage, you’d pay that off and have $120,000 in tax-free cash to play with.

Closing costs on a cash-out refi are often more than you’d be required to pay on a home equity loan, but the cheaper interest rates are hard to turn down.

No matter how you choose to access your equity, talk with a financial adviser to make sure it’s a wise move for you. Whether it’s a refi, a HELOC or home equity loan, your home will be your collateral.

Note: If you fall behind on your payments, you could wind up losing the house and all your equity will disappear.

Have a healthy day, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.