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What’s the most powerful tool you own? The answer: Your mortgage. That pesky payment due every month can actually do much more than just get you a house. As you know, your mortgage can help build your credit score, create long-term wealth, and give you tax benefits. But it can also allow you to enhance your home and property, inside and out. That’s because with a mortgage comes equity. And with equity comes borrowing power. As your home equity grows, you can borrow against it for remodels, repairs, and improvements.
One popular home improvement trend we’re seeing right now in Fireside is new swimming pools. Even with the two beautiful pools at the Community Center, quite a few residential pools are being built. This is due in part to favorable interest rates and increasing home equity. And while there’s nothing quite like the convenience of going for a swim in your own backyard, pools do not come cheap. That’s where mortgage refinancing comes in handy.
Suppose you want to put in a swimming pool that costs $30,000, but you don’t have the cash available. You can pay for the pool by borrowing against your home’s equity – otherwise known as refinancing. This would increase your total mortgage amount by $30,000, but you pay it back at interest rates lower than a regular bank loan. And because it’s a mortgage, the interest is tax-deductible. If you’ve ever heard people talk about “pulling out equity,” this is what is they mean. Plus, here’s the best part: When interest rates are low (like right now), you may be able to structure your mortgage to get a pool built but keep your monthly payment the same.
- Same monthly payment
- Lower interest rate
- You get a swimming pool!
Many homeowners would take that deal – and lots of them already have. The rates on a refinanced mortgage can be significantly lower than taking out a 2nd mortgage or the financing through the pool builder. Next to cash, it’s the best way to pay for major home improvement projects.
As with any major financial decision, we recommend you consult with an expert to ensure you’re making the best decision for your individual situation. Who knows…you might be closer than you think to a new swimming pool. Don’t forget the sunscreen.