Owning a home can be extremely rewarding. But if you\u2019re anything like most homeowners, you\u2019ve also got a laundry list of home improvements and a to-do list that\u2019s never-ending. One of the biggest advantages of homeownership is the equity you build in your home. The faster you pay your mortgage and build this equity, the better financial shape you\u2019ll be in. <\/p>\n\n\n\n
Whether it\u2019s repairing a leaky roof or making your Pinterest kitchen become a reality, you can make your dreams come true by making your home equity work for you as a powerful financial tool.<\/p>\n\n\n\n
Here\u2019s a few tips to keep in mind.<\/p>\n\n\n\n
Build equity faster<\/b><\/p>\n\n\n\n
It\u2019s as easy as it sounds! During the first few years that you make payments towards your home loan, most goes towards interest rather than the principal. The more you owe on the mortgage, the more interest you\u2019ll pay. <\/p>\n\n\n\n
\u201cYou can build up your equity faster by paying a little extra per month on your mortgage,\u201d said Sean Murphy, Navy Federal Credit Union\u2019s head of equity products. \u201cEven paying just one extra mortgage payment per year, you\u2019ll knock off interest to be charged, increase your equity and pay off the loan sooner.\u201d<\/p>\n\n\n\n
Know your options<\/b><\/p>\n\n\n\n
Once you\u2019ve gained equity in your home, you can use it. Your home\u2019s equity is an asset that can be used to boost your borrowing power. Because it is collateralized, it usually has a better interest rate than an unsecured loan.<\/p>\n\n\n\n
The most common options that allow you to use your equity is through a Home Equity Lines of Credit (HELOC) or Fixed Home Equity Loans. Both options use your home as collateral to provide credit for your needs.<\/p>\n\n\n\n
HELOCs work a lot like credit cards. You\u2019ll be approved for a specific amount of credit that represents the maximum amount you can borrow. This amount is determined by calculating how much your home is worth, the amount you owe on your home loan, and your credit history. You pay a variable interest rate and have a minimum payment due each month based on the amount of the credit line you\u2019ve used. The loan terms of repayment can often be 10 years or more. <\/p>\n\n\n\n
\u201cMany of our members prefer the flexibility of a HELOC,\u201d added Murphy. \u201cNearly half of the HELOC applications we receive are for home improvement.\u201d<\/p>\n\n\n\n
Another option for upgrading your house to the home of your dreams is through a fixed-rate home equity loan. This operates more like a traditional home loan where you get a specific amount of money based on the equity available in your home. There\u2019s a set schedule to repay the loan, generally ranging from 5 years up to 20 years, and it offers a fixed interest rate. <\/p>\n\n\n\n
Get all of the facts<\/b><\/p>\n\n\n\n
Whatever your financial needs may be, making the best decision starts with understanding your options.<\/p>\n\n\n\n
\u201cThe best advice I can give to a homeowner is to talk to your trusted financial institution,\u201d said Murphy. \u201cThey\u2019re the experts and they\u2019ll be able to get you the detailed, most accurate information about the products offered. We encourage our members to ask us the tough questions so that we can help them make the best decision for them.\u201d <\/p>\n\n\n\n
Here\u2019s a few helpful questions you\u2019ll want to ask:<\/p>\n\n\n\n
Make sure you also look at how long you\u2019ll want or need to repay the loan. The most important thing is for each person to look at their own circumstances. Take time to understand your needs and the overall impact on your budget.<\/p>\n\n\n\n
\u201cWe meet our members where they want to be served,\u201d said Murphy. \u201cSome members prefer to read all of the information online, some prefer to talk to someone in the branch, and some prefer to call our 24\/7 call center. Whatever questions they have about equity, we answer them in the channel the members prefer.\u201d<\/p>\n","protected":false},"author":7,"featured_media":93683,"menu_order":0,"template":"single-native-legacy","meta":{"_acf_changed":false,"_acf":"","_yoast_wpseo_primary_category":"15"},"advertiser":[3437],"class_list":["post-54383","native","type-native","status-publish","has-post-thumbnail","hentry","advertiser-navy-federal"],"acf":{"subheadline":"","legacy_arc_id":"VLL2HEER7ZD5DKDITM36NVLTSQ","arc_canonical_url":"\/native\/navy-federal\/2019\/07\/05\/mission-renovation-using-your-equity-for-home-improvements\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"native-layout","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented By:"},"yoast_head":"\n