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Homeowners tend to find themselves living in a home while paying a static mortgage loan’s monthly payments like clockwork. Mortgage loans feel pretty straightforward, yet there is so much more you can do to hasten your repayments or leverage your home’s equity in order to reduce your overall debt burden.
These four tips will help you make the most of your home loan in order to bring a higher quality of life to your family and home.
1. Consider refinancing options.
Refinancing is the best and only way to renegotiate the terms of your mortgage loan and monthly payment obligations. A typical new loan is taken out over a fifteen, twenty, or more year period, and the interest rate—if on a fixed interest rate term—remains static no matter what happens in the economic landscape around you. This might be a fantastic thing for you and your family. As inflation rises and the Federal Reserve boosts the central bank interest rate, those on variable mortgage terms will see their rate increase. However, during an economic downturn, like the one we are seeing in the United States and elsewhere as a result of the coronavirus pandemic, interest rates are falling through the floor and leaving your fixed rate behind.
Looking into ways to refinance home loan payments for you and your family is the only way to take advantage of a lower interest rate, saving you thousands of dollars or more in the process with new loan terms. In order to refinance, you will essentially borrow a second mortgage loan with new monthly payment terms and a different interest rate from your lender. This will be used to pay off the initial loan and can even be utilized in order to free up some equity in the home for other projects that you’ve been planning.
2. Leverage your mortgage into home repair financing.
Homeowners have a unique asset in their homes. The structure facilitates a comfortable lifestyle, but it also acts as leverage for borrowing in order to assist with desperately needed repairs to the home itself.
Window replacement in Texas, for instance is a crucial update that many southwestern homeowners find creeps up on them without much notice. The wind and unpredictable weather in TX, coupled with a potentially poor maintenance regimen, makes for window replacement as an urgent need for many homeowners. Borrowing against your home’s equity for a repair or new windows is a great way to tackle a much needed project without having to worry about where you will slash your monthly budget.
3. Make renovations on your home with the help of your equity.
In addition to mandatory repairs, your home equity and financing stream can be leveraged to fund additional renovation projects that will improve your overall quality of life in the home. Adding on a new room or replacing an aging kitchen with new fittings is a great way to take advantage of your ownership of the home while improving on the underlying value of the asset too. Renovations are a mainstay of the American and worldwide trend in homeownership. Americans in particular spend more than $400 billion on home improvement projects every year.
4. Consider using your home as collateral in order to finance a real estate investment.
Real estate investors see unique profits on their investments, and a growing dividend in the form of monthly rent payments. Instead of initiating a hard pull on your credit score and history as you look for sources of funding as a borrower, consider leveraging your own home as a means of tamping down the overall costs of a new real estate investment.
Striking while the iron is hot has been the prevailing wisdom in the real estate game for many years, and utilizing a current home is a great way to achieve this.