Page 69 - December 2018

A contribution from a Chicago Lodge 7 Magazine sponsor
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Tapping into your home’s equity
Whether you’re planning for home renovations, college tuition or an international adventure,
Keep the risks in mind. Borrowing against your home’s equi- tycanmakesensetofinancelargerimprovements,buttaking out too much equity could leave you in a tricky situation. If your project or expenses exceed the amount of your available equity, you might have to tap into other re- sources like savings or high-interest credit cards. If you have an equity line, keep in mind that your rate could
increase, making your payments higher in the future. Be mindful of tax deductions. Using a home equity loan to improve your property could afford you deductions at tax time. It’s always best to discuss these matters with a trust- ed tax professional, but under current tax law, interest paid on these types of loans may be deductible up to a certain amount. If you’re considering home improvements and want to get an expert opinion on the potential return on investment, call your trusted realtor. He or she can help you make the best choices to ensure that your plan fits market demand both now and in
the future.
Lisa Sanders of Dream Town Realty has been selling real es- tate for over a decade, averaging at least 50 homes per year. Her awards include the Chicago Association of Realtors’ Top 1% Pro- ducer, Five Star Professional Award for exceptional client service, and #1 Realtor in 60631 and 60656 (2017 MRED calendar year sales volume).
me’s equity is a great way to finance m
big-ticket items. Two popular types of loans are home equity loans and home equi- ty lines of credit (HELOC). Here are a few things to consider before moving forward with these financing options:
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LISA SANDERS
You’ll need enough equity in your home
to qualify for a loan. Having enough equity in your home protects both you and your bank. Most
banks won’t issue a home equity loan unless your combined loan-to-value ratio is around 80 percent or less, though this may vary depending on your credit and payment history. You can expect to pay more for a loan with a higher loan-to-value ratio.
You have a choice between a home equity loan and a home equity line of credit. A home equity loan works much like a tra- ditional mortgage. You’ll borrow a set amount and repay over a designated period of time. Another option is a home equi- ty line of credit (HELOC), which allows you to borrow up to a certain amount of money at a variable rate over a designated time. The key difference is that you don’t have to borrow the full amount at once. Think of a HELOC as a credit card — you borrow what you need as you need it and pay back what you borrowed as you go.
Real Estate
CHICAGO LODGE 7 ■ DECEMBER 2018 69