Tapping Home Equity in Illinois to Surge Your Finances
Have you ever thought about tapping your home equity in Illinois? Many Americans consider home equity as a path to finance large projects. However, many millennials are using it in ways previous generations didn’t consider.
While financial advisors may scoff, many millennials allocate their home equity specifically to fund large vacations or entertainment-based purchases. In this case, practicality may be taking a backseat.
But is this a bad thing? When truly is the right time to tap into your home equity? And what are the ‘right’ and ‘wrong’ things to do it for?
Right Times to Consider Tapping Home Equity in Illinois
Let’s start off with the right times to consider tapping home equity in Illinois. The most common use of equity is to fund home improvements or repairs that increase the value of the home. Not only do home improvements add value, they last a long time. Beyond that, home improvements tend to improve quality of life and are grounded in practicality. A win all around.
Similarly, there are plenty of financial tactics worth making. Consolidating debt, investing, and paying down student loans fall under typical reasons for tapping home equity.
‘Wrong Times’ to Consider Tapping Home Equity in Illinois
On the other hand, many financial advisors have their share of ‘wrong times’ to consider tapping home equity in Illinois. The aforementioned vacations and entertainment-based purchases most likely fall under this category. Financially speaking, many of these tend to be short-term purchases.
Unfortunately, these are not investments that grow your home’s value. In addition, they don’t offer a practical approach to debt relief.
How You Can Take Advantage of Home Equity
There are a few ways people typically use home equity to finance projects:
Home Equity Loans: With a home equity loan or home equity line of credit (HELOC), the recipient borrows a sum of money against the home’s equity. Oftentimes, HELOC’s go towards home improvements, repairs, and renovations.
Cash-Out Refinance: Another popular option, cash-out refinancing increased at the onset of the COVID-19 pandemic. In fact, cash-out refinances surged 42% from 2019 to 2020. Essentially, cash-out refinances replace your home loan with a larger mortgage, enabling you to capitalize off the built-up home equity.
Regardless of what financial advisors may recommend, everyone faces a unique financial situation. Tapping your home equity in Illinois may be the right way to surge your finances.
For legal guidance on Illinois real estate, schedule an appointment with the attorney at Lee Scott Perres, P.C.
