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Spring is one of the best times to start home improvement projects. Warmer weather and easier driving make for better working conditions. However, some improvement projects can come with a hefty price tag. Can you use home equity for spring project financing? Homeowners may not realize that one of the most valuable financial tools is right under their feet.
Whether homeowners want to renovate their kitchens, add decks, or enhance their landscaping, using home equity for spring projects can be a smart way to invest in their homes' value while enjoying the benefits of improved living spaces.
Access your home equity with MIDFLORIDA Credit Union today.
What is home equity?
Home equity refers to the value of a homeowner's property. Home equity is calculated by subtracting the outstanding balance on the mortgage from the current market value of the home.
To calculate home equity, use this handy formula:
Home Equity = (Current Market Value of the Home) - (Remaining Mortgage Balance)
Every monthly mortgage payment you make will increase your equity. Property values can also change with fluctuations in the local real estate market.
Homeowners can use this equity to fund various projects through specific loan products, such as a home equity loan or a home equity line of credit (HELOC).
Home Equity Loan vs. HELOC
There are two primary ways to access your home equity:
- Home equity loan: These loans are paid in a single lump sum if approved. They have a fixed interest rate and set repayment terms. Home equity loans are often ideal for projects that have a set cost.
- Home equity line of credit (HELOC): Alternatively, HELOCs are more flexible. They function like a revolving line of credit with a variable interest rate. You draw money as needed, making them a great option for ongoing expenses or multiple projects.
These equity loan options typically offer lower rates than credit cards or personal loans—an attractive choice for many to finance home renovations.
Why use home equity for spring projects? Spring is popular for home renovations due to favorable weather conditions and increased contractor availability.
Here’s why using home equity for spring projects makes sense.
- Increase your home’s value: Investing in home improvements can boost a property’s market value. Projects such as kitchen remodels, bathroom upgrades, and outdoor enhancements can provide a strong return on investment when it comes time to sell.
- Improve energy efficiency: Spring is an excellent time to upgrade your home’s insulation, replace windows, or install energy-efficient appliances. These improvements can lower your utility bills and enhance your home’s efficiency.
- Enhance curb appeal: Well-maintained exteriors can make a lasting impression. HELOCs, or home equity loans, can finance projects like landscaping, exterior painting, or a new front door, instantly boosting a home’s curb appeal.
- Take advantage of lower interest rates: Home equity products often have lower interest rates than other popular forms of credit, making them a cost-effective way to finance renovations. As a possible bonus, interest paid on a home equity loan or HELOC might be tax-deductible if the funds are used for home improvements (check with a tax professional).
Best spring projects to fund with home equity
Considering using your home equity for spring projects? High-impact renovation suggestions that enhance your home’s value and functionality include upgrades to your interior or exterior or improvements to your home’s energy efficiency.
Outdoor upgrades:
- Deck or patio addition: Expand your outdoor living space with a deck or patio to create an inviting area for relaxation and entertainment.
- Landscaping enhancements: Fresh flowers, new sod, and strategically placed trees can transform a drab yard into a lush oasis.
- Fence installation: A new fence provides privacy, security, and aesthetic appeal.
Interior renovations:
- Kitchen remodel: Update cabinets, countertops, and appliances to modernize your kitchen and improve functionality.
- Bathroom upgrades: A new vanity, updated fixtures, or a walk-in shower can enhance comfort and style
- Flooring replacement: Swap outdated carpeting for hardwood or tile to give your home a modern look.
Energy-efficient improvements:
- HVAC system upgrade: A new heating and cooling system can improve energy efficiency and reduce long-term utility costs.
- Window replacement: Install energy-efficient windows to enhance insulation and lower energy bills.
- Solar panel installation: Looking to invest in renewable energy? A HELOC can help finance solar panel installation.
Steps to using home equity for spring projects
Ready to use your home equity for spring projects? Follow these steps to ensure a smoother financing process.
- Assess your home equity: Check your home’s current market value and subtract your outstanding mortgage balance. Most lenders allow you to borrow up to 80-85% of your home’s equity.
- Determine project costs: Get some estimates from contractors. Factor in common additional costs like permits, materials, and labor. A clear budget will help you decide whether home equity lending is the right choice.
- Compare loan options: Explore different home equity financing options and compare interest rates, repayment terms, and fees. MIDFLORIDA offers some of the state's most competitive home equity loans and HELOCs.
- Apply for financing: Make sure you have your documentation ready, such as income verification, credit history, and home appraisal details. Strong credit scores and stable incomes can improve loan approval chances.
- Use funds wisely: If approved, use your home equity funds for renovations that provide great long-term benefits. Stick to your budget. Prioritize projects that enhance your home’s value.
Is using home equity the right choice for you?
Before tapping into your home equity, consider these factors:
- Loan repayment ability: Ensure you can manage monthly payments without straining your budget.
- Long-term financial goals: Planning to stay put for many years? Investing in improvements can be worthwhile for long-term owners.
- Interest rate trends: Locking in a fixed-rate loan may be beneficial if interest rates rise.
Get started on your spring projects today
Spring into the new season by refreshing and enhancing your home.
Whether a major renovation or a small upgrade, leveraging home equity for spring projects can help turn your vision into reality.
Ready to finance your home improvements? MIDFLORIDA is here to help. Reach out to us and find the right one for your needs.
