House prices have gone up in many markets across the country. The chart below illustrates what this could mean for you based on your home value and the rate of appreciation in your neighborhood.
Here are two ways you may be able to benefit if your home has gone up in value:
1 – Cash-out Mortgage RefinanceYou may be able to access some of your newly created home equity by refinancing your mortgage into a higher-balance loan. Cash-out proceeds may be used for:
Debt consolidation – pay off other debts with higher interest rates
Home improvements – make new indoor or outdoor improvements to your home
Any other purpose including other large upcoming expenses
2 – Sell Your Home with Tax-Free Capital GainsIf you’ve lived in your house as your primary residence for two out of the past five years, you may be able to sell it at a profit without having to pay any capital gains taxes. The limitations on this are $500,000 of tax-free gains for married couples filing a joint tax return and $250,000 of tax-free gains for individuals or married couples filing separate tax returns. For more details, see my article titled, How to Get the Primary Residence Capital Gains Tax Exclusion.
PLEASE NOTE: This article is provided for illustrative purposes only. It is not an offer or commitment to lend you money, and it is not an advertisement for a specific mortgage or a specific interest rate.