After a time of rising home prices, homeowners are more likely to have additional equity in their home. Equity is the difference between your home’s value and the amount you still owe on your mortgage. You may be able to borrow against this equity to complete a home renovation project.
Before beginning, it’s important to consider the potential return of investing more into your home. Some projects have the potential to add value to your home. This can happen if you remodel a kitchen or bathroom, or if you create more finished space, like in a basement or attic.
Conversely, replacing a roof, while an important maintenance aspect, doesn’t generally increase the value of your home. Similarly, turning a spare room into a finished workout area or home office space is unlikely to add value to your home even though it can improve your quality of life.
When considering the use of home equity, another consideration is the potential tax deduction. The interest on home equity loan products have the potential to be tax deductible if the loan funds are used to improve your home. It’s always best to consult with a tax expert to discuss your own unique situation.
Lastly, not all home equity products are alike. You have the option to choose from home equity loans, home equity lines of credit (often called HELOCs), or a combination of the two, like Tri City’s Home Bank Equity Plan. Your Tri City lender can provide guidance on these options and help you choose the product that best fits your needs.
Visit Tri City’s Home Equity page for more information, and to watch a video on our Home Bank Equity Plan.
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