**From First-Time Buyers to Rental Investors: How Are People Spending Their Home Equity?**
As home values continue to rise, homeowners are sitting on a growing pool of home equity. According to a recent study by The National Association of Realtors (NAR), the average homeowner has gained $56,700 in equity over the past year. That’s a significant amount of wealth that can be used to fund a variety of financial goals.
So, how are people spending their home equity? Here are a few of the most common uses:
**1. Home improvements**
One of the most popular ways to use home equity is to finance home improvements. This can be a smart investment, as it can increase the value of your home and make it more enjoyable to live in. Some common home improvement projects that people finance with home equity include:
* Kitchen remodels
* Bathroom remodels
* Additions
* New roofs
* Windows and doors
* Landscaping
**2. Debt consolidation**
Another common use of home equity is to consolidate debt. This can be a good way to save money on interest and get out of debt faster. If you have high-interest credit card debt or other unsecured debt, you may be able to get a lower interest rate on a home equity loan or line of credit.
**3. Education**
Home equity loans can also be used to finance education expenses. This can be a good option for people who want to go back to school or pay for their children’s college education. Home equity loans typically have lower interest rates than student loans, and they can be used to cover a wider range of expenses.
**4. Investments**
Some people use their home equity to invest in stocks, bonds, or other financial assets. This can be a risky strategy, but it can also be a good way to grow your wealth over time. If you’re considering investing your home equity, it’s important to do your research and understand the risks involved.
**5. Rental properties**
Another popular way to use home equity is to invest in rental properties. This can be a great way to generate passive income and build wealth over time. However, it’s important to do your research and understand the risks involved before investing in rental properties.
**How to get a home equity loan**
If you’re interested in getting a home equity loan, there are a few things you need to do:
* Check your credit score. Lenders will typically require a good credit score to qualify for a home equity loan.
* Get an appraisal of your home. This will determine how much equity you have in your home.
* Shop around for the best interest rates. There are a number of different lenders that offer home equity loans, so it’s important to compare interest rates and fees before you choose a lender.
**Conclusion**
Home equity can be a valuable financial tool. It can be used to fund a variety of financial goals, such as home improvements, debt consolidation, education, and investments. If you’re considering using your home equity, it’s important to do your research and understand the risks involved. With careful planning, you can use your home equity to achieve your financial goals..
