This week, Craig Siminski, of CMS Retirement Income Planning, shares an article discussing various ways to tap your home equity:
With home values skyrocketing recently, your home may be one of your largest assets. Using home equity to help finance other financial objectives is a strategy many people consider, but before doing so be sure you understand the risks as well as the potential benefits.
Home equity is the difference between how much your home is worth, based on current market conditions, minus your mortgage balance.
Let’s say your home is worth $450,000 in the current market and your outstanding mortgage is $250,000. That means you have $200,000 in equity.
In most cases, lenders will allow you to borrow up to 80% of your home’s value minus your mortgage balance. In the example above, the total amount you might borrow would be $110,000 (assuming you qualify).
It’s probably best to be as conservative as possible when using home equity. There’s no guarantee that your home will maintain its current market value, so you could end up owing…
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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