Using Your Home’s Equity to Adapt to Life’s Different Stages

Our lives can be looked at as a journey broken up into many different stages, from building a career to starting a family to, eventually, retirement. To successfully navigate these chapters of life, financial stability is crucial – and your home equity could help.

Your home equity is the current market value of your home minus what you still owe on your mortgage. If you’ve been making payments on your home for years, or if you own your home outright as 40 percent of Americans do, according to a November 2023 Bloomberg report, then you can tap into your home’s equity in the form of home equity loans or home equity lines of credit.* These options give you the ability to access cash at lower interest rates, and with longer repayment periods, than other forms of borrowing.

Whether helping to fund education, buy a vacation home or more, your home’s equity can offer valuable financial flexibility and security for life’s many stages. Here’s how:

Funding education: If you’re sending children off to private school or college, or looking at going back to school yourself, you could use home equity loans or lines of credit to help cover tuition or other college expenses. Tapping into your home equity rather than taking out traditional student loans could help you invest in education without accumulating excessive debt.

Buying a second home: Another potential use for your home equity could be to buy a second home or a vacation home. Your equity can help you put together a substantial down payment, or even purchase the entire home altogether. Plus, the interest on a home equity loan may be tax deductible if you’re using it to purchase or improve a home.**

The unexpected: Of course, not all of life’s stages are expected or planned. Sometimes life throws a curveball at you in the form of a medical emergency or major home repair, for example. No matter what happens, your home equity could be an important resource to help you manage unforeseen expenses.

Home equity can provide many different uses depending on your stage of life, but it’s important to remember that as with any form of credit, it should be used responsibly, and you’ll eventually need to pay back what you borrow, plus interest.

This article was published in the Mortgage Spring Newsletter 2024.

_{*Available in AZ, MN, ND and WI
**Consult a tax adviser for further information regarding the deductibility of interest and charges.}