Investing in your home could help increase its value when it's time to sell. Upgrading your home's curb appeal, making it more energy-efficient, and updating appliances can help to attract buyers. A Chase Home Equity Line of Credit could be a great option to help you finance these repairs.
If you've been in your home for a while, and have been a good steward of your mortgage payment, you'll likely have equity you can use to fund a large-scale home improvement project. Not only will it make your home more functional and attractive, but it can bolster its resale value when you're ready to move. A great option for larger projects is a Home Equity Line of Credit (HELOC) from Chase for up to 80% of your home's current value, less than the amount you owe on mortgages. The credit framework of a HELOC is similar to a credit card, meaning the credit line gets replenished every time you make a payment. And the interest rate is usually less than credit-card rates — an important factor if the projects costs well into five figures. It's often better to use a fraction of a home equity line of credit, as opposed to maxing out a credit card. So, now that you know how to pay for your bigger projects, it's time to figure out what type of renovation makes the most sense for your needs. Here are a few renovation ideas to consider that could be well worth the investment. And to help get you started, this quiz by Chase can give you a personalized vision board for your new space. 1. Get green Updating your home with more energy-efficient features will dramatically cut utility costs and give potential buyers confidence that the heating and air systems won't break down soon after they move in. In fact, a survey of real estate agents by the National Association of Realtors found that more than half of potential buyers were interested in energy-efficient homes. Even if you're not ready to sell, you will likely reap savings for items like Energy Star-certified windows or gas-powered tankless water heaters. 2. Cook up something new in the kitchen You can refresh the look, feel, and functionality of your kitchen by installing new appliances or giving cabinet fronts a facelift. A fairly simple remodel can be completed for about $20,000, and replacing those creaky cabinets and outdated appliances could help you recoup up to 80% of that investment when you sell your home. According to Remodeling magazine, a bigger kitchen project can still generate about 60% in ROI. And for these larger undertakings, a HELOC might be a good option to help you cover the expenses. A Chase Home Lending Advisor can help you figure out if this is the best route for you. 3. Beef up the basement If your family is growing and you need more space, or if your college grad has recently returned to the nest, it might be time to invest in your basement. If it's unfinished, give your basement a thorough cleaning — and then build out a bedroom and bathroom. Future potential buyers could envision it as an in-law suite, or a rental option for travelers and students. 4. Landscape lusciously It's amazing what a few carefully chosen and placed trees and shrubbery can do for a sub-par front yard. When the new azaleas and pink dogwoods are in bloom, the curb appeal of your property will attract potential buyers in droves. And, according to the US Department of Agriculture, healthy, mature trees can add an average of 10% to a home's property value. 5. Get smart If your house was built before smart-home technology became a must-have, allocate some of your renovation money to these useful high-tech connectivity upgrades. Most functions — from accessing security cameras to controlling your lights or HVAC system — can be handled through the touch of a smartphone keypad. While some of these renovations can be completed for just a few thousand dollars, others are bigger ticket items. Rather than raid your savings to pay for the upgrade, you may consider the financing options from Chase. Learn more by visiting Chase. This post was created by Insider Studios with Chase.
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A home equity loan could help you get the money you need for a renovation or emergency — here's how they work
Home equity loans allow homeowners to borrow against the value of their home. Many lenders...Home equity loans allow homeowners to borrow against the value of their home. Many lenders will allow homeowners to borrow up to 80% of their home's current value. While home equity loans are often used to pay for home renovations, the money can be used in whatever way the borrower chooses. Sign up to get Personal Finance Insider's newsletter in your inbox » Your "home equity" refers to how much your home is worth minus the remaining balance on your mortgage. If your house has increased in value since you purchased it or you've paid off a solid portion of your mortgage (or a combination of both), you could have a significant amount of equity built up in your home. Home equity is a valuable tool that gives you a lot of financial options. On one hand it means that you would net a profit if you were to sell. But what if you have no interest in moving? In that case, you may still be able to tap your home equity by taking out a home equity loan. Whether you're looking to fund a home renovation, pay for unexpected medical bills, or consolidate debt, borrowing against your home's equity could be a good way to get your hands on a large chunk of cash. But there are some risks that you'll also want to consider. Here's how it all works. How does a home equity loan work? Home equity loans and lines of credit (HELOCs) are both considered second mortgages. After you take out a home equity loan, you'll have two loans that use your home as collateral —- your original mortgage and the home equity loan. The first step towards deciding if this type of loan would be a good option for you would be to calculate how much you'd be able to borrow. To estimate your home's current value, you can use online tools like Zillow, Redfin, or Realtor.com. Or, to get a more accurate estimate, you may want to give a local real estate agent a call. Once you've estimated your home's value, subtract your mortgage balance to calculate your home equity. Let's say your home is worth $400,000 and you owe $160,000 on your mortgage. In this case, you'd have $240,000 of equity built up in your home and a 40% loan-to-value ratio. Many lenders limit homeowners to a combined loan-to-value ratio of 80%. In this example, 80% of $400,000 is $320,000. When you subtract your remaining $160,000 mortgage balance from $320,000, you find that you could potentially borrow up to $160,000 with a home equity loan ($320,000 - $160,000 = $160,000). What are the differences between a home equity loan and a line of credit (HELOC)? While the terms "home equity loan" and "home equity line of credit" (HELOC) are often used interchangeably, they're actually two different types of home equity debt. With a home equity loan, you borrow the entire amount at one time in a lump sum. Then, you'll immediately begin making equal monthly installment payments to repay the loan. With a HELOC, you receive a revolving line of credit as opposed to a lump sum loan amount. HELOC borrowers are approved for a maximum loan amount that you can borrow against as needed during the draw period (usually up to 10 years). As you pay your balance down, more of your available credit becomes available to borrow against. During the draw period, HELOCs work, in many ways, like credit cards. You have complete control of how much you borrow and you can borrow against your credit limit multiple times. However, after the draw period ends, you won't be able to borrow any more and you'll start making equal monthly payments. Home equity loans tend to come with fixed interest rates while HELOCs generally use variable rates. A home equity loan could work well if you know exactly how much you need to borrow and want to lock down your rate. But a HELOC could be a better option if you want flexible access to your home's equity over time. What are the borrower requirements for a home equity loan? It may seem obvious, but your lender will want proof that you actually have equity in your home before they'll approve you for a home equity loan. Most lenders will send a home appraiser to determine what your home is worth and how much equity you have available to borrow against. If you do, in fact, have equity in your home, the borrower requirements will essentially be the same as what lenders use for first mortgages. That means most lenders will require a credit score of at least 620 and a debt-to-come ratio below 43%. Proof of employment and income records will likely be required as well. What are the benefits and risks of a home equity loan? The fact that a home equity loan would be secured by your home limits your lender's risk. And, because of this, they may offer better interest rates or easier borrower requirements with home equity loans than unsecured forms of debt like credit cards or unsecured personal loans. In addition to getting access to attractive rates and terms, you may be able to get your hands on a lot more cash with a home equity loan than you'd be able to borrow with an unsecured loan. And homeowners are allowed to deduct the interest paid on a home equity loan as long as the money is used for home improvement. The downside to taking out a home equity loan is that you could lose your home if your financial situation changes and you aren't able to make your payments. This is one reason why it can be a dangerous move to consolidate unsecured debt (like credit card debt) with a home equity loan. Credit card issuers can't take your home without first winning a judgment in court. But if you pay off your credit cards with a home equity loan, your home would then be at risk if you were to default on the loan. This doesn't necessarily mean that moving high-interest credit card debt to a lower-interest home equity loan is always a bad move. But you'll want to carefully weigh the pros and cons. While consolidating unsecured debt can be a risky use of home equity loan funds, using the money to renovate and increase the value of your home can be a really smart move. Other good reasons to take out a home equity loan could include paying for college, starting a business, or covering an emergency expense. How can homeowners shop for a home equity loan? Before you start the home equity loan shopping process, you'll want to check your credit. You can check your credit score for free with tools like Credit Karma or Credit Sesame. And at AnnualCreditReport.com you can check your credit reports with all three credit bureaus for free once per week through April 2021. If you see errors on one of more of your credit reports, you'll want to dispute them to have them removed before you start submitting loan applications. You can shop for home equity loans at most banks, credit unions, or with online lenders. Many will allow you to check your pre-qualified rate without impacting your credit score. But even if a few hard credit inquiries hit your credit report within the span of a few weeks, the credit scoring models will generally consider them as one inquiry. What are some alternatives to a home equity loan? If you're sure you want to tap your home's equity, but you're not thrilled about the idea of having two loan payments to manage each month, you may want to consider a cash-out refinance instead. You'll typically need to meet the same equity requirements if you go this route. But after completing the cash-out refinance, you'd be left with only one monthly payment to worry about instead of two. If you're looking for a way to consolidate high-interest debt without putting your home at risk, you may want to apply for a 0% balance transfer card. Or if you'd prefer to borrow a lump sum that repay over time, unsecured personal loans often offer better interest rates than credit cards. More personal finance coverage 4 reasons to open a high-yield savings account while interest rates are down Here's the average auto loan interest rate by credit score, loan term, and lender The best high-yield savings accounts right now Here are the banks with the best CD rates The best rewards credit cards 7 reasons you may need life insurance, even if you think you don't Join the conversation about this story » NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence
The CEO and founder of a retirement-planning app says two things could jeopardize your retirement:...The CEO and founder of a retirement-planning app says two things could jeopardize your retirement: withdrawing from your 401(k) and spending too much. Avoid spending on things that aren't necessary, as those purchases could hinder your ability to stay invested right now, or require you to take on debt. If possible, avoid borrowing or withdrawing from your 401(k) — doing so could mean lower balances in the future and less growth. Read more personal finance coverage » The choices you make today will influence the amount you have saved to live on tomorrow. Retirement savings grow over time, so balancing your immediate needs with your long-term goals is a must, especially when you're years away from retiring. Interrupting the amount you're adding to your savings, even years before you need it, could be detrimental to the amount you'll have when it's time to retire. Rhian Horgan, CEO of financial technology company Kindur and founder of retirement planning app Silvur, says no matter how tempting it is to borrow from your 401(k), or how easy it is to overspend during your working years, avoiding these traps is a must. Getting into the habit of overspending makes it harder to afford retirement As today's economy struggles with rising unemployment rates and volatile stock markets, now is not the time to take on new debt, buy items you wouldn't usually, or splurge. "Dial down your spending to give yourself the ability to stay invested and ride out this market that we're in," Horgan tells Business Insider. "Now is probably not the time to be thinking about buying a new car or a new boat," Horgan says. It's the time to focus on saving, and working toward your long-term goals. "What are the ways that you can pull back on the discretionary spending, but also still have some quality of life?" she asks. Not only does spending more than you should make it hard to continue investing for the future, but potentially taking on debt also makes it more difficult to transition into retirement on a limited income. By keeping your costs down and your lifestyle on-budget, you can set yourself up for long-term financial success. Withdrawing from your 401(k) should be a last resort As Americans lose work and look for ways to make ends meet, taking money or borrowing from 401(k) accounts can sound tempting. The government has eased penalties on early withdrawals during the coronavirus pandemic, temporarily suspending the 10% penalty usually imposed on disbursements. If you're wondering if an early withdrawal is the right choice,"Generally, I don't think that makes sense," Horgan says. Even with the relaxed restrictions, an early withdrawal or loan against your 401(k) could still do long-term damage. Retirement accounts depend on compound interest to grow, which means the longer you can leave your money alone, the better. Taking money out of your account could hurt the balance you'll have saved when you retire, even if you replace it later. Though it should be a last resort, sometimes it's the only option. "From a cost of borrowing perspective, there are specific scenarios where it may be cheaper to borrow from your 401(k) then to take out a home equity loan or a credit card," Horgan says. If you're considering borrowing from your 401(k), make sure to consider all of your other options first, like personal loans, credit cards, or home equity loans. Also, consider your ability to repay the loan quickly, and how possible it would be to add more to your retirement account to make up for losses. More savings and retirement coverage How to retire early The best high-yield savings accounts right now The banks with the best CD rates When to save money in high-yield savings Join the conversation about this story » NOW WATCH: Tax Day is now July 15 — this is what it's like to do your own taxes for the very first time
There are so many choices when it comes to travel credit cards that it can be...There are so many choices when it comes to travel credit cards that it can be hard to know where to start. And even when you've settled on a card, you may not be sure whether you're maximizing its benefits and rewards. If you're looking for some guidance, you've come to the right place. Keep reading for tips from Business Insider's network of travel and credit card experts. See Business Insider's list of the best rewards credit cards » If you want to earn points and miles to book award flights and hotel stays, your best bet is to sign up for a travel credit card, earn its welcome bonus, and continue accumulating rewards with your everyday spending. There's no one right way to use rewards credit cards, but in this complicated hobby, every little bit of knowledge helps. That's why we've rounded up the best tips for choosing and maximizing credit cards from our network of points and miles experts. Several of them spend more time traveling than they do at home, so they know a thing or two when it comes to maximizing points, miles, and travel card benefits. Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back. 1. You can have lots of credit cards and a high credit score It's a myth that opening new credit cards automatically spells disaster for your credit score. Just ask Holly Johnson, who has 26 credit cards and an excellent credit score in the 800s. Johnson travels with her husband at least four months out of the year and uses cards like the Hilton Honors Aspire Card from American Express to enjoy elite status and annual statement credits. As Johnson explains, the key is to use your cards responsibly. Whether you have one card or more than 30, falling behind on your credit card bills is a surefire way to tank your credit score. 2. The Chase Sapphire Preferred Card is great for beginners In 2019 contributor Adam Bauer used Amex Fine Hotels & Resorts, a benefit of the Platinum Card® from American Express, to score a great deal on a luxury stay in Las Vegas. However, Bauer recommends a different option entirely to those who are new to credit card rewards. The Chase Sapphire Preferred makes for a perfect entry point into the world of using points for travel. It even has a higher sign-up bonus than the Chase Sapphire Reserve (60,000 points after you spend $4,000 in the first three months versus 50,000 points with the same spending requirement), and it comes with a great selection of benefits that covers all your bases. You'll earn 2x points on travel and dining, and you get some helpful travel protections like primary rental car insurance and trip delay insurance to cover you if anything goes wrong. When it comes time to redeem your Ultimate Rewards points, you have lots of great options, from using them to book travel through Chase with a 25% bonus to transferring them to airline or hotel partners. Plus, the card has a $95 annual fee, compared to $450 on the Chase Sapphire Reserve. If you catch the award travel bug and decide you want to upgrade to the Reserve, you can always upgrade after your first year. 3. You can get thousands of dollars in value from credit card sign-up bonuses and benefits Provided you don't sit on your stash of points and miles and you can take advantage of other benefits like annual statement credits, you can come out ahead with premium credit cards. Here are just a few examples: Business Insider's David Slotnick got $2,000 in value from the Amex Platinum in his first year with the card, thanks to the card's welcome bonus and perks like Gold elite status with Marriot and Hilton. Eric Rosen recently shared how using Chase Ultimate Rewards points from the Chase Sapphire Reserve allowed him to book award flights to Cabo San Lucas and save about $4,000 on airfare during a peak travel period. The Business Platinum Card® from American Express has one of the highest annual fees around ($595), but when you add up all its benefits — from annual statement credits with Dell to savings through the Amex International Airline Program — you could get up to $7,000 in value. Again, that's if you put all these benefits to use; if you're not a frequent travel, a cash-back credit card could be a better option. 4. An annual fee isn't always worth it — but it can be Everyone has their own philosophy when it comes to paying annual fees for credit cards — even financial advisers differ on whether it's worth it. If you're on the fence, keep in mind that it comes down to whether or not you can put a credit card's benefits to use. Travel and credit card expert Caroline Lupini pays more than $4,000 in credit card annual fees, but she says it's worth it because she spends about eight months out of the year on the road and has no trouble getting value out of perks like the $300 annual travel credit on the Chase Sapphire Reserve and the lounge access benefits of the Platinum Card® from American Express. 5. The United Explorer Card has a hidden feature that makes it easier to use your miles Contributor Jason Steele uses hotel credit cards to enjoy free nights in Colorado, Hawaii, and more, and he uses an airline card to stretch his miles further for award flights. Steele stumbled across an unsung benefit of the United Explorer card: additional saver-level award availability. If you have the Explorer card or another United credit card, you'll have more opportunities to redeem your miles at the lowest mileage award level than non-United cardholders. You just need to be logged into your United MileagePlus account to see the additional saver-level seats. The difference between the cheapest award prices and the "standard" level of awards can be tens of thousands of miles, so having a United card can help you stretch the value of your miles much further. 6. It pays to have an 'emergency fund' of travel rewards Elizabeth Aldrich, who quit her job to work and travel and now lives in rural Costa Rica, says having various types of travel rewards on hand has helped her save money when she needed to book last-minute travel. Her advice for building your own "emergency fund" of points and miles? It helps to have a few different points and miles currencies so you can be flexible. She focuses on Chase Ultimate Rewards, but also earns hotel points with the World of Hyatt Credit Card and airline miles with the Gold Delta SkyMiles® Credit Card from American Express. 7. 'Double-dipping' on credit card rewards helps you earn more points faster The points and miles hobby can be even more rewarding when you have a partner earning rewards alongside you. Contributor Clint Proctor and his wife "double-dip" on credit card rewards by each opening cards like the Southwest Rapid Rewards Plus Credit Card. This way, they can each earn a sign-up bonus — getting them more points for travel and helping them earn the valuable Southwest Companion Pass, which lets you bring a friend or family member on flights with you for just the cost of taxes and fees. 8. Using the right card for each purchase matters Credit card sign-up bonuses — which earn you a lump sum of points, miles, or cash back after you meet a minimum spending requirement — are the easiest way to quickly acquire rewards. But that's just half of the equation. To maximize his points-earning, Eric Rosenberg not only focuses on earning the most valuable sign-up bonuses, but he also makes sure he's using the best credit card for every single purchase so he can earn as many rewards as possible. Rosenberg's used credit card rewards to book travel including a trip to Israel in business class. Here are his top picks for maximizing recurring expenses: American Express® Gold Card for 4x points at US supermarkets (on up to $25,000 per year, then 1x) Chase Sapphire Reserve for 3x points on travel (excluding a $300 travel credit) Ink Business Cash Credit Card for 5% cash back (5x points) on internet bills (up to the first $25,000 spent each account anniversary year, then 1%/1x) Chase Freedom Unlimited for 1.5% cash back (1.5x points) on "everywhere else" purchases Click here to learn more about the Chase Sapphire Preferred » More credit card coverage What's the best airline credit card? The best cash-back credit cards Southwest credit card review Best rewards credit cards Join the conversation about this story » NOW WATCH: A 45-year-long study discovered trends in successful hyper-intelligent children