The average sales price of a single-family home in the Denver Metro real estate market hit $624,048 last week. That is up $116,000 from just 18 weeks ago.
What should homeowners do with that equity, if anything at all? Some will say sell and capitalize, some will say pull the equity out. The answer is always the same however, it depends.
It depends on the homeowner, the stage of life, risk tolerance, goals and dreams. That is why homeowners need a real estate professional who is an advocate and consultant.
Here are the six ways in which a homeowner can enjoy the equity that may have been realized in their home over the last few years:
1. Do nothing
Live your life as you are, knowing that in a pinch you might have a nice nest egg of equity in your home to access at some point in the future. You might choose to get a home-equity-line-of-credit as a security blanket, should the need arise.
2. Property Improvements
You may love your home, and you want to love it just a little bit more. Maybe you’ve wanted to remodel the kitchen, or clean up the landscaping. Maybe you just need some great décor, or want to finish the basement. New hardwood floors or just paint and carpet. Or maybe it’s a really large project like “popping the top” or an addition to the home. Using the equity in your home to fund projects like this can be a wonderful investment because it enhances your enjoyment of the property and increases the value of your home when the projects are done well. In some cases the projects can pay for themselves, even multiple times over.
3. Refinance
I know, you’ve heard this for years. Interest rates are historically low. If you plan on staying in your current home for more than another two years and your current interest rate is higher than 3.5%, you should talk to a lender. The savings may be tremendous. It costs you nothing to explore your options, but could save you tens of thousands.
4. Purchase investment properties
Many people have built tremendous wealth by growing real estate portfolios. Usually it is the fear of the unknown that stops people from making these purchases. Just answer this question, “do I like the idea of building wealth through real estate?” If the answer to that question is either yes or maybe, you should seek no-obligation professional guidance on the best steps for you.
5. Second Home
For some people, buying a second home is an amazing idea right now. They have lots of equity in their primary residence and maybe have a career in an industry that feels recession proof. If you’ve always dreamed about that mountain home or beach villa, maybe now is the time to explore the possibilities in your favorite spots.
6. Make a change
Whether you want to buy a larger home, have more land, better views, better schools, or a smaller or retirement home, selling your current home isn’t the only option. It’s possible you could hang on to your current residence to begin building a real estate portfolio and buy another home.
Whether it is a referral to my wonderful lending partner, a property management company, handyman, painter, carpet supplier or an architect, we have all of the resources to help you sort through the above options to build wealth in real estate the way you want.
Think about your choices above and let me know how I can help!
