How to Release Equity From Your Home: A Step-by-Step Guide
10 Tips for Selling Equity in Your Home
Are you looking for a way to release equity from your home? Maybe you are considering selling and want to know how much money it will bring in. Or maybe you are considering a refinance. Whatever the case may be, there is a plenty of good information out there to help you make an informed decision about your home equity and how it can benefit you.
Discuss these strategies with your trusted advisors before making any decisions that could have significant tax or other consequences.
Consider the current condition of your home and its potential resale value before you decide to sell. While most homeowners are looking for ways to create cash, many may also want a place where they can live after selling their house.
If you have a nice, well-maintained home in a good location with less than 20% equity, it might make sense to keep living there while renting it out on AirBnB or other services as an income property. You could potentially generate enough rental income each month that’s greater than what your mortgage payments would be if you were still paying off the loan.
If you have a fixer-upper with more than 20% equity, it may make sense to sell the home and use that money to purchase one where you can renovate. This will allow you not only to get out from under your mortgage but also be able to customize your new space exactly how you want.
If you’re looking for ways in which selling your house could help propel retirement savings, these strategies are probably better suited for those who don’t plan on living in their homes after they sell them.
It’s smart not to give up any of the profit when trying to release equity by refinancing. For example, if someone had a 30-year mortgage with a 20% equity stake, they would be able to refinance for another 30 years at the same interest rate and get out from under their original loan without giving up any of that equity. This is in contrast to selling where someone may have to give up some or all of those proceeds.
If you want your home’s value to increase while trying not lose money by releasing its equity, consider buying an investment property. Again, this strategy might make more sense if you don’t plan on living in it after you sell.