Home is where the heart is. But for a growing number of Americans, it’s also where the money is. A new report shows that U.S. home equity has increased 13.3 percent in the first quarter of this year to just over $1 trillion, compared with a year earlier, according to real estate data firm CoreLogic. For the average American borrower, that translates to $16,300 in additional home equity gained during the year. That’s the biggest gain in four years!
Homeowners can tap the equity in their properties for a variety of purposes, including remodeling, repair work, paying college tuition and debt consolidation. Home repairs and renovations remain the top use for home equity financing.
Equity can be tapped in one of several ways, such as a home equity loan or a home equity line of credit. A line of credit — a HELOC — can be an important financial planning tool, providing a flexible source of cash for unexpected or large expenses. It can help supplement cash savings, doesn’t accrue interest charges until it’s used and doesn’t require selling shares in an investment to obtain the cash. Depending on the use of the home equity loan or line of credit, the interest may still be tax deductible as well, even under the new tax reform law.