As you pay off your mortgage, your equity — or the stake in the home you actually own — increases. And the more equity you build, the more you stand to gain when you sell.
But even if you aren’t planning to sell your property, equity can be used in a few different ways. Consider these four possibilities if you’d like to make the most of what you have.
With a home equity loan or line of credit (HELOC), you can turn your stake in your home into money that you can use for renovations, repairs or any other cost you might be facing.
Buy a New Home
Taking out a home equity loan or other product may give you the money you need to buy a vacation home or investment property. You could also sell your existing home, turn a profit and use those funds toward your next place.
Pay Off Debt
If you have high-interest credit card debts, personal loans or car loans, you might consider using a home equity loan or cash-out refinance to pay them off. This essentially rolls those balances into your new loan (and mortgages tend to have lower interest rates than other loans or credit lines).
Use It Toward Retirement
Equity also makes a great nest egg. Once you retire, you have the option to sell your home, downsize and use the profits your equity gave you to boost your income.