Home values are increasing!!!! Not just here or there, but almost everywhere! THANK GOD!!! Considering I make my living by providing mortgages, nobody is happier about this than me. You see it is a heck of a lot easier for me to help someone refinance if they have equity than if they don’t. So even though I feed my family by helping people purchase a new home or refinance the one they already have, I’m going to attempt to talk you OUT of refinancing. Why? Because I’m an idiot? Maybe. Or, possibly, because I am attempting to actually learn from history and hope you’ll do the same.
Think back even 6 years ago. If you had a home 6 years ago, I’d be willing to bet you had equity in that home. You might not have had any savings, but you weren’t concerned because you had an equity line with XXXXXX available on it. It might have started out just like your first credit card out of college, strictly for emergencies. However, slowly you got sold on exactly how easy and convenient it was to access that money. You could do home improvements, go to Vegas where you could possibly win millions, then you could do some debt consolidation to pay off the credit cards you racked up in Vegas because (SHOCKER) you didn’t win millions. It was easy as writing a check and the real beauty was, you could do so with confidence that it wasn’t going to bounce because if you got near your limit on the equity line, the bank offered to increase your line or even another equity line in the form of a 3rd mortgage. What a country right??? Actually, what a red flag it should have been.
I don’t need to go into great detail about what started happening the following year as home values decreased, equity lines were frozen, and what we are still recovering from as a country. However, let me just be the first to say, that as we once again start to gain equity in our homes, we will once again face the slew of advertising about home improvements, vacations, debt consolidation. Here is my wacky idea: let’s save up for those things and keep that equity in our homes. I don’t care how fun the vacation is. What happens in Vegas, you shouldn’t still have to be making payments on twenty years later. Want to do home improvements but don’t have the money to do everything you want to get done? Don’t feel like you have to get it all done at once! Save up and work on one project at a time. If this is something you really want to do and you start now, by next Spring (right about all the time you are getting 10 offers a day from all the sharks that want to help you pull the equity out of your house), you’ll already feel like you have a new home!
Lastly, for those of you that are thinking you want to help expedite the appreciation in your homes, I’ll leave you with the top three home improvement projects that will maximize the return on your investment:
1. Kitchen- Update it. How are your cabinets, your countertops, your appliances? Slight changes here can give your kitchen a whole new feel.
2. Bathrooms- If your tub resembles the ones used on old westerns, maybe it is time for an upgrade. How about the vanities? The showers? Modern amenities can bring you right into the 21st century!
3. Do some painting: I am far from an interior designer so I don’t know what the latest hip colors are. Heck, if I’m being honest, my wife still has to let me know if my clothes even match half the time. But my point is, if you are tired at looking at the same boring old walls, maybe you don’t need a new house, maybe you just need a new fun color on the walls you already have. That’s right, I said fun! After all, it is YOUR house. When we lived in Texas, my wife had a “bee in her bonnet” as she would say, about wanting our bedroom walls to be red. So like any intelligent man, I was going to give my wife whatever she wanted in the bedroom. It was something different and we liked it. Visitors to our house never had to see it and good friends got a kick out of our “romantic red room.” We didn’t care, life is short, so have fun!
Anyway, none of the above have to break your bank or strip your equity. They can all be done fairly reasonably and you’ll feel that much better when you are enjoying your new and improved home without new debt.
Tom is licensed in CA, CO, and TX (NMLS 262409) and can be reached for questions at 303-834-3875 or via email at firstname.lastname@example.org