Your Home Mortgage as a Financial Tool

By Kelly Richardson Columnist

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If you're encumbered by excessive debt, looking to make some home improvements, or you're an investor looking to get into the real estate market, your home can be your most valuable financial tool to improve your situation. Here are some sensible tips on making the most of your home's equity potential.

There's nothing quite like the power of equity to improve your overall financial situation. If you follow the advice of most experts, you'll buy a modestly priced home in an up and coming neighborhood. One reason to do this is because the equity that will build up in your home rather quickly can be used for a variety of purposes. Carefully studying the market values and understanding the ways equity can be used are the first steps towards making the most fiscally responsible decisions when you exercise your equity options.

Home Mortgage Power

  • » Home Improvement Loan. A Title I home improvement loan from the Department of Housing and Urban Development allows for a 20-year, $25,000 loan for additions to your property. For a multifamily structure, the maximum rate is $60,000.
  • » Home Equity Line of Credit. A HELOC loan is kind of like a credit line that you can borrow against for debt consolidation or home improvements. HELOCs have a set time period and cash limit that can be withdrawn over the life of the loan.
  • » Basic Refinancing. Certainly the most popular option for homeowners in recent years, a mortgage refinance allows you to fold high interest credit card debt into a new mortgage that can reduce your monthly payments significantly.
  • » Investors. Those considering getting into the real estate market as an investor will want to understand every aspect of equity and how it grows. By adding up the potential equity in several homes in an area, investors can purchase homes in a promising area and use equity build up to add to their portfolios.
The bottom line is that homeownership is still the best way to start making your money work for you. If you're currently renting, it's a good idea to investigate purchasing your own home. And if you own a home, set one of the equity tools to work for you today.

U.S. Department of Housing and Urban Development

About the Author
Kelly Richardson covers the real estate scene in major cities across the country. His articles appear in educational journals, periodicals, and e-zines.

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