In many markets, housing prices have rebounded since the Great Recession. If you bought your house when prices were low, you may have more equity in your home than you realize.
That equity can be especially beneficial if you pay for PMI (private mortgage insurance) every month.
To get rid of your monthly PMI payment, you need at least 20% equity in your house. The only way that happens–aside from paying that much off–is the value of your home rising, either because the housing market has taken off or you’ve made improvements.
If you suspect your house is worth enough that you have 20% equity you can inform your lender and pay to have an appraisal done. And if you’re already going to pay for an appraisal, you might consider taking out a home equity loan at the same time.
A home equity loan also requires an appraisal that you pay for, so if you have large home projects on the horizon, it makes sense to pay for only one. Even if you’re not quite ready for a home improvement project, you could take out a tax deductible, home equity line of credit (HELOC) and pay interest only on the amount you use.
Plus, getting rid of the PMI payment will free up cash to help you pay back the equity loan. And if it’s for a home improvement project, you’ll be putting equity back into your house–the definition of a win-win.