Page 11 - Hawaii Renovation - May 7, 2017

CYapitalize on what’s yours through home equity
our most valuable as- homeowner’s insurance — Gaining access uity Conversion Mortgage set is around you all if the lender is collecting for to your equity (HECM), which is an FHA- the time. It’s above these and making the pay- Now that you understand insured Reverse Mortgage
you, it’s below you and in many cases you don’t realize how much it can do for you.
According to the Urban Institute inWashington,D.C., “Americans have a staggering amount of untapped equity in their homes.” How much? Altogether, 11 trillion, 30 bil- lion dollars.
Yet despite this huge wealth possessed by home- owners, using it isn’t as sim- ple as writing a check. You have to capitalize on your home’s equity.
What Is Home Equity?
Your home’s equity repre- sents the difference between its current market value and the money that you owe on it.
Let’s say, for example, your home has a market value of $200,000, you made a down
payment of $40,000 and you took out a $160,000 mor t- gage. At that point your equity is $40,000.You can always calculate this number by taking your home’s initial price and subtracting the amount you still owe.
Now, let’s say 10 years lat- er you have paid off $60,000 of your $160,000 mortgage. At this point you still owe
$100,000 on your home’s initial price of $200,000 so your equity is $100,000, as- suming the home’s value has remained the same.
A little at a time
Each month when you make a mor tgage payment, some of your money goes toward interest, some goes toward real estate taxes and
ments on your behalf — and some goes toward paying off the mor tgage itself. This last por tion grows your equity because it subtracts from the amount you still owe.
Your home equity can also grow if your home in- creases in value because the amount you still owe has not changed. A rise in value may be due to increased home prices in your area and/or improvements you make to the home.
Market home prices may rise and fall from one year to the next but given enough time, most real estate tends to increase in value. For ex- ample, current economic forecasts from CoreLogic project a 4.8 percent in- crease in home prices year over year in 2017.
what equity is and how much equity you have, your next question may be “How do I use it?” Your first step is to contact a knowledgeable mortgage professional.
You’ll want to do your re- search to determine which type of loan is best for you. You should also take the time to compare interest rates, of- fers and loan features.
Andifyouareage62or older, you are also eligible for additional home equity options such as a Home Eq-
loan.This loan may be taken as a lump sum, a line of credit, through fixed monthly pay- ments or a combination and the loan can never be frozen or reduced.
To learn about HECM Reverse Mortgage loans and other special home- equity options available to homeowners 62 and older, visit reversemortgage.org/ HomeEquity.
This article is courtesy of Brandpoint.
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