You can grow your savings without managing a dozen different investment accounts
There are so many options for investing in your future – buying stocks, investing in a mutual fund, opening an IRA account – to the point that it can be hard to pick one. However, there is another option that is very simple: investing in your home. By improving the value of your home, or raising the amount of equity you have in your home, you can effectively ‘save’ money, without having to navigate the complexities of traditional investments. This means you get the benefit of growing your money over time, while also potentially reducing your debt or improving your home – it’s a win-win situation !If you’re ever in a situation where you need a significant amount of money, refinancing your home is a very straightforward way to do it. And keep in mind that the size of a refinance loan is dependent on your home’s value, and the amount of equity you have in your home. This means that if you raise your level of equity, or the property’s value, you’ll have access to a larger amount of potential money in the future.
Raising the Value
The first way you can use your cash on hand to invest in your home is through raising your home’s value. Usually this is done in the form of renovations. Adding a basement suite to your home can significantly increase the value, and provide you with additional income! Alternatively, sprucing up the exterior of your home can also raise its value, meaning you’ve also raised your net-worth.
Raising Your Equity
While simply raising the value of your home through renovations is usually a great use of your money, doing the kinds of renovations required to significantly raise your home’s value can be very expensive. If you, like many Americans, can’t afford significant renovations to your home simply taking advantage of your mortgage’s prepayment privileges is a fantastic way to make your money work for you. Prepayment privileges are a part of the fine-print of your mortgage, and allow you to pay additional money toward your initial mortgage loan – the principal – without facing penalties – of course, this depends on the specific fine-print of your mortgage. By taking advantage of your prepayment privileges you can pay off your mortgage faster, meaning you have more equity in your home sooner. We’ve talked about how refinancing can help you, and if you’ve raised the value of your home you can qualify for a larger refinance loan! This means the value of the money you’ve invested in your home will grow over time, instead of diminishing due to inflation.
A home is many things – shelter, safety, a place to raise a family – but it can also be an investment. Talk to your mortgage broker or reach out to us and find out how you can leverage the value of your home to enhance your financial security.