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It’s a seller’s real estate market in Birmingham today. The chances of selling your home quickly right now for top dollar have never been better. The downside? Finding your next home. For buyers, it’s nothing but slim pickings and bidding wars.
What if you could skip moving altogether and turn your CURRENT home into your DREAM home? If your house doesn’t fit your needs, but you’re not ready to call the moving trucks, you may be pleasantly surprised to learn you have built up enough equity to have it updated or renovated.
Where is all the equity coming from?
Home equity has skyrocketed all around the country, including in Birmingham, Alabama. Nationwide, homeowners are collectively sitting on 7 trillion dollars in equity, according to figures presented by Black Knight. Over the past ten years, owners have been paying down their mortgages while watching their values increase. According to CoreLogic, owners today have an average of $204,000 in home equity. Just this year alone, equity increased by 16.2%, or in other words, owners have seen their home price jump up by an average of $26,300. That sounds like a new kitchen to me!
So how does a homeowner tap into their home equity?
The best way to see if you have built up your home’s equity is to check your mortgage balance against what a home like yours is selling for in your area. To determine what your home is worth, you can check with your favorite local realtor or check Zillow and Realtor.com for the sold home stats in your neighborhood. If it looks as if you have made some progress and you’re interested in tapping into your home’s equity for a renovation, home addition, improvements, or other expenses, your next step is to contact your lender and discuss your options.
With interest rates continuing to hover at an all-time low, you could end up with a better interest rate too!
What kind of home improvements and renovations can increase your home’s value?
If you’re considering updating your home or adding on, you might be wondering what kind of improvements would increase your home’s values? Not everything is guaranteed to improve its worth.
In my work as a realtor over the past twenty years, there are generally four categories improvements fall in – 1) Improves Value 2) Modestly Improves Value 3) Not much change in value but deferring the improvement would decrease the value and lastly, 4) Does not improve the value.
Home additions that add heated and cooled square footage are usually great ways to increase the value of your home. Updating a tired kitchen or outdated baths can help improve your home’s worth.
Adding a deck or patio, fencing, and landscaping, or improving the curb appeal of your house could modestly improve the worth of your property.
Replacing mechanicals like a water heater, heating, and air system, or getting a new roof while helping to keep your property from losing value, may not increase it by much. Still, if they need replacing, it’s best not to defer this necessary maintenance. Why not get those upgrades done using cash from your own home’s equity at historically low-interest rates?
The best way to determine the costs of your renovations or updates and how they might affect your home’s value is to ask a contractor or renovator and speak with your mortgage lender.
Home equity is on the rise, and low interest rates make borrowing cheaper than it’s ever been. Is it time to finally get the chef's kitchen of your dreams or upgrade your tiny bathroom into a luxury spa retreat? There has never been a better time!