It’s easy to assume that if you need money as a homeowner, the best option will be to sell your property. However, this is not the case and there are a few reasons for this. First, it’s possible that the property market isn’t at the right point where you will get what your home is worth through a sale. Second, you might find that it’s more difficult to sell your home than you first anticipated. That’s why you should be ready to explore other alternatives. For instance, you could look at home equity.

Home equity is a way of freeing up cash in your home and the big benefit is that you can spend it however you like. There’s a lot to consider here including the home equity rates but with so many ways to spend this money, it’s difficult to know where to start. These are some of the key options we recommend you explore when you are looking at how to use your home equity in Oregon.

Home Improvement

You could take advantage of the equity in your home by using it to complete some home improvements and home renovation work. For instance, you might decide to complete work on the kitchen or the bathroom. These are two key areas that buyers are often very interested in. Some research suggests that the right home improvements here could add as much as 25% to the value of your home. This is of course the key reason you should spend money on home improvements. It can help ensure that when it is time to sell your home, you get a larger profit. This could allow you to move to a larger property or even guarantee that you have a great lifestyle through your twilight years when it’s time to retire.

You might think that the best option here will be to withdraw a lump sum. However, you could also consider a home equity line of credit. This is useful if you are planning to complete a series of renovations around your home over an extended period. When you are completing renovations to your property, make sure that you don’t change your home so much that you outprice potential buyers. If your home no longer matches the average value of other properties in the area it could turn off some people from putting an offer on your property.

Launching A Business

Are you interested in starting your own business? Don’t let the reports online that most businesses fail in their first year scare you. While this is always a possibility, it’s equally possible that your new company is a tremendous success. Particularly, if you can tap into the demand for your company that does exist on the market.

Do be aware that you can not start a business with nothing. This is why your home equity can be useful. Essentially, it means that you can borrow what you need to start your company and hit the ground running. The amount of equity that you’ll need will depend largely on your business model. Reports suggest that the average cost of starting a business is $3,000 for an online company or closer to $10,000 for the typical brick and mortar business.

You could be worried that starting a business like this will leave you at risk of facing bankruptcy if your company fails. To avoid this, you should make sure that you set up your company as a publicly-traded company. This means that if your business does fail or falter, any debts incurred are limited to your business. Your finances will be protected if you do eventually face bankruptcy with your company.

Don’t forget putting the right amount of money into your business in year one will reduce the chances that it fails. Particularly if you are facing a lot of competition on the market.

College Costs

Next, you should consider using the equity in your home to cover the costs of your child’s college education or even your further education. This option should be considered where mortgage rates are significantly lower than student loan interest rates. It will also allow you to extend the term of the debt and thus reduce the overall amount of money that you will need to pay.

If you are planning to fund your child’s education through a home equity loan, you need to make sure that you look at the available home equity rates. You should also explore the monthly payments that you will need to be able to cover. Ideally, you should work to guarantee that you will have completely paid off the debt by the time you retire. If that doesn’t seem like a feasible option, then a student loan will typically be the right choice.

The main message here is that you do need to make sure that you are researching all the options. There will be some cases where taking out equity will be riskier than a student loan. But in other cases, it could provide more value. This is another reason why you need to carefully research all the conditions and terms of a home equity loan in Portland and compare them directly to another option like a student loan.

Do note that you should consider paying further education costs with an equity loan because it can provide long-term financial benefits. If you explore the right degree or program, then you can make yourself far more hireable overall. This could allow you to increase your income which will mean that any money that you borrow will be easy to pay back over time.

Debt Consolidation

It is possible that you currently have debt that is accumulating a high level of interest. This could include a loan on a car or perhaps a credit card. Be aware that with some car financing options, the interest is essentially baked in. This means that paying it off early won’t impact the level of interest that you need to pay. However, in other cases, the interest could be increasing each year. A home equity loan might allow you to consolidate the debt and allow you to access a far lower rate of interest, reducing your monthly payments and making them more manageable.

Do be aware that this will mean that you are changing unsecured debt into secured debt. As such, you do need to be careful that you don’t build up your level of debt. However, this won’t be an issue as long as you have a solid debt payoff plan in place.

Emergency Costs

You may also want to look at a home equity loan in Portland Oregon if you have emergency expenses that you need to pay for. Experts recommend that you save an emergency fund that will cover up to six months of typical expenses. However, this is always going to be easier said than done. Particularly if you are already struggling to stretch your income so that it covers all the costs you have to pay.

There are numerous emergency costs that you might choose to cover with a home equity payment. For instance, you could have medical bills. Alternatively, you might be dealing with a period of redundancy. An extended redundancy can cause the costs to add up and you might struggle to stay on top of all your bills. If you take out an equity loan, then you can cover the emergency expenses that you have without accumulating a high level of debt.

Again, if you take this step, then it’s important to make sure that you do have a plan in place to repay any debt that you take on. You need to guarantee that you don’t end up in a situation where the debt becomes impossible to manage in the long term.

Long-Term Investment Options

Another smart way that you could use your home equity would be to invest in real estate or the stock market. This could be worth exploring if you expect the returns here to climb over the cost of the original home equity loan. Long-term investments will always have high levels of risk. For instance, you might be interested in exploring the stock market. But there’s no guarantee that any stocks you are exploring will perform as well as you hoped for. Similarly, if you decide to invest in property then you can’t guarantee that it will retain the same level of value and give you the income that you hoped for.

That said, if you understand what you are investing in and you don’t invest more than you can afford to lose, then this could be a solid choice. It’s important to make sure that you have specific goals. For instance, you might be thinking about getting a vacation home for your family. You can do this if you arrange a down payment and that can be paid for with your equity loan.

Wedding Wonders

The cost of a typical wedding can be quite high. For instance, one report suggests that the average cost of a wedding can be as much as $28,000. It’s also worth noting that wedding costs are growing and have climbed each year aside from 2020 for obvious reasons.

It’s quite common for people to take out wedding loans to cover the cost of your wedding. They tend to do this without comparing the interest rates. Often loans of weddings have higher rates of interest compared to the home cost of equity loans in Portland Oregon. The reason for this is that they are unsecured and thus not tied to an asset. This poses more of a risk for the lender.

If you are taking out a loan for your wedding, it can seem incredibly freeing. It will also allow you to cover the cost of your plans for a dream wedding. You just need to make sure that you don’t take out more than you need to spend. You could think about paying for some of your wedding costs with the help of family members and then paying for the extra with a home equity loan.

Flipping Homes

Finally, you might want to consider using home equity in Oregon to flip properties. You probably know at least one person who has experience and success in flipping properties. A common misconception is that flipping homes is the perfect investment option for everyone and this just isn’t the case. You’ll find it far easier if you have some knowledge of construction and perhaps even a certain level of skill in this area.

You also need to make sure that you treat flipping a home like a business venture rather than a hobby or pastime. If you don’t put enough work into flipping a property, then it is never going to give you the benefits that you want. A home equity loan can provide you with the loan that you need to get a deposit down on a property that you are interested in flipping. Remember, the secret to flipping a home is to make sure that you do think about investing in a property that has aesthetic issues but not serious problems that are going to cost a fortune to repair. This is the easiest way to make sure that you can always get back any money back that you spend.

You could also consider renovating a property and letting it out rather than selling it on the market for a relatively quick profit. It’s just a matter of working within the right budget.

We hope this helps you understand some of the key choices that you can consider when examining how to take advantage of your home equity in Oregon. Remember, Home equity rates can vary dramatically. So, you do need to make sure that you are exploring the market carefully looking at the home cost of equity loan in Portland Oregon before committing to this idea.

If you’d like to start the process of getting a home, come see us at the Tammi Lindley Team. We are Portland’s premier mortgage lenders, offering hundreds of mortgage products so you can pick the mortgage that matches your needs. Contact us today and start the process of owning your dream home.