Regaining Your Lost Home Equity
Six trillion dollars. Most of us have difficulty wrapping our brains around such a figure. That’s roughly how much U.S. homeowners lost in home value—$5.9 trillion, to be exact—from March 2006, when the housing market peaked, through November 2009, according to Zillow.com.
When seeking ways to recover lost home equity, consider these questions:
• What’s my best move? That depends. If you’ll stay in your house for many more years, you have time for it to regain value. If you plan to move soon and need to sell, you’d need to act sooner to boost your home’s value, and thus your equity.
• Should I do home improvements? If you need to sell, doing minor fix-ups can enhance your home’s appeal and value, and hence your equity, without costing a lot of money.
• Is it smart to do major renovations? Doing major remodeling just to boost your house’s value usually doesn’t pay. Renovation projects don’t earn a dollar-for-dollar return in increased home value.
• Could I refinance?Mortgage rates are at historic lows. You may be able to refinance to a fixed-rate mortgage at a lower rate. Our mortgage officer, Jana Ledbetter can help you. Call her at 618-457-3595 to discuss your options.
• Should I pay off my mortgage faster? If you do, you’ll build equity faster and pay less total interest over the life of the loan. You might refinance from a 30-year to a 15-year mortgage. Or keep the longer-term mortgage and pay extra when you can.
• Is there a better use for my money? Financial planners urge homeowners to look at the big picture. Putting extra money into your mortgage won’t build your wealth over time. Instead, you could put that extra amount toward paying off high-interest debt, contributing to your 401(k) to get the employer match, or investing conservatively. Our CERTIFIED FINANCIAL PLANNER Jeff Rose is available to help you. E-mail him at jeff.rose@siucu.org or call him at 618-549-8632.
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