Boston Condos for Sale and Apartments for Rent
Boston condo owners: Popular uses of home equity loan
Experts agree there’s no chance of a large-scale foreclosure crisis like we saw back in 2008, and that’s good news for the housing market. As Mark Fleming, Chief Economist at First American, says:
“. . . don’t expect a housing bust like the mid-2000s, as lending standards in this housing cycle have been much tighter and homeowners have historically high levels of home equity, so there likely won’t be a surge in foreclosures.”
Data from the Mortgage Bankers Association (MBA) helps tell this story. It shows the overall percentage of homeowners at risk is decreasing significantly with time (see graph below):
But even though the volume of homeowners at risk is very low, there is still a small percentage of homeowners who may be coming face to face with foreclosure as a possibility today. If you’re facing difficulties yourself, it can help to understand your options. It starts with knowing what foreclosure is. Investopedia defines it like this:
“Typically, default is triggered when a borrower misses a specific number of monthly payments . . . Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property.”
The good news is there are alternatives available to help you avoid going through the foreclosure process, including:
- Reinstatement
- Loan modification
- Deed-in-lieu of foreclosure
- Short sale
But before you go down any of those paths, it’s worth seeing if you have enough equity in your home to sell it and protect your investment.
You May Be Able To Use Your Equity To Sell Your House
Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.
In today’s real estate market, many homeowners have far more equity in their homes than they realize due to the home price appreciation we’ve seen over the past few years. According to CoreLogic:
“The total average equity per borrower has now reached almost $300,000, the highest in the data series.”
So, what does that mean for you? If you’ve lived in your Boston condo for at least a few years or more, chances are your home’s value, and your equity, has risen dramatically. In addition, the mortgage payments you’ve made during that time chipped away at the balance of your loan. If your home’s current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage.
Rick Sharga, Executive VP of Market Intelligence at ATTOM Data, explains how equity can help:
“Very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure. . . We believe that this may be an indication that borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction.”
Lean on Boston condo Experts To Explore Your Options
To find out how much equity you have, work with a local real estate professional. They can give you an estimate of what your house could sell for based on recent sales of similar homes in your area. You may be able to sell your house to avoid foreclosure.
If you find out you have to pursue other options, your agent can help with that too. They’ll be able to connect you with other professionals in the industry, like housing counselors, who can look into your unique situation and offer advice on the next steps if selling isn’t your best alternative.
Boston condos and the Bottom Line
If you’re a homeowner facing hardship, let’s connect so you have an expert on your side to explore your options and see if you can sell your house to avoid foreclosure.
If you’ve purchased a Beacon Hill condo within the last few years, you’ve likely noticed an increase in your home equity. Though some homeowners prefer to use their equity as pure profit when selling their homes, there are many other uses for home equity, including these 5 popular options.
1. Boston Condo Renovations
Alternatively referred to as remodeling or makeovers, renovations can transform one room from looking old and boring to a more modern feel. Renovate the kitchen and bathroom in your Beacon Hill condo so it pays dividends in resale and equity.
2. Consolidation
Blending two or more debts into one manageable lump sum makes payments easier for owners and saves money on interest. Equity consolidation from Boston Beacon Hill condos, lofts, and penthouses is lower than third-party debt consolidation or credit card consolidation programs. In return, credit scores are likely to increase because one bill is less expensive than two.
3. Unexpected Events
Fires, water damage, and vandalism can destroy a property and result in high repair costs. For homeowners who are short on finances, using equity to pay for damages is a welcome bonus. Equity can be used to pay for emergencies such as home repairs, hospital bills, funeral expenses, and job loss.
4. Starting a Small Business
Take your idea to the next level. Use your equity to start or expand the small business you’ve always wanted to get off the ground. Because money can be tight during the startup phase, consider equity as the jump start for the next phase of the business plan. Nevertheless, a plan to repay the equity is mandatory for entrepreneurs in case the startup doesn’t get off the ground.
5. Education
College is expensive, and costs are increasing by the semester. Scholarships and grants are tough to obtain, while student loans can be difficult to pay back. It’s tempting to use equity to pay for a college education, and many homeowners take this route. Nonetheless, this option should be a last resort. Exhaust all your resources before using equity for education. Additionally, ensure the career choice is something you truly desire and can turn a profit to repay your equity loan.
To learn more about making your equity work for you, get in touch with the real estate experts at 92101 Urban Living. We would be happy to show you some of the beautiful lofts, penthouses, and condos Beacon Hill Boston residents desire. Give us a call at 617-720-5454 today
