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Selling your home is a big decision. It also means moving, which can take a serious toll on your finances and be a real hassle. It’s not something that most people take lightly and there’s other factors at play. What effect will it have on your kids? Will you be able to profit from the experience? Will a new home meet your needs? And most importantly, does the need outweigh the cost and stress?

When asking yourself if it’s time to sell your home, you will want to consider the following.

Is it a Seller’s Market?

Have you noticed a lot of your neighbours are selling? Does it feel like a lot of homes in your neighbourhood or building are going for above asking?

One of the best reasons to sell is to turn a profit. This will allow you to upgrade your home and lifestyle. In most cases, one’s home is their greatest investment.

Does your Current Home Not Fit your Needs?

While it might not check off every box, your house or condo should enhance and not detract from your life. If your space feels cramped it might be time to consider selling and upgrading. This isn’t to say you should upgrade just so you can fit a second car but if you need a bigger garage and an extra bedroom then your current home just might not fit your life.

Your Finances have Changed

Life changes and it changes fast. If you lose your job or want to take a chance on a new business venture, then selling your home might make sense. You never want to take a loss but downgrading is a proven way to balance your finances if challenges arise.

On the flipside, if you come into some money or a fortuitous promotion then it might be a good idea to sell and upgrade into something closer than your dream home.

The best advice is to give thought to moving if you find yourself with multiple reasons, such as, improved finances and the value of your home has increased. That’s a good benchmark to accept that it is time to sell.

One of the best reasons to apply for a home equity loan is to improve your home and raise its value. If this is your goal than you want to make sure every dollar is invested in the right improvements and not into areas that won’t yield a return.

This means that even if you want to finally install surround sound in your home theatre, it might make more sense to grout bathroom tile.

There are several areas of home improvement that can potentially turn your home equity loan into a healthy investment.

A New Kitchen Can Revitalize your Home

There is no room or aspect of a home that figures more greatly into its value and sale than the kitchen. It’s usually the showstopper and the centerpiece that can inspire bidding wars. When looking to increase the value of your home, the conversation should start (and possibly end) with a kitchen revamp.

Finish that Basement

An unfinished basement can look like a crime scene and there’s nothing worse than when you’re giving a tour of your home and your guest asks about your unfinished basement.  The price of a basement was built into the price you paid so wouldn’t you rather it be more than boxes, hockey equipment and a rusty furnace?

Using money from a home equity loan to turn a dank basement into a functional living space will pay off in spades.

Don’t Overlook Small Improvements

From sealing a driveway to a new backsplash even more modern appliances, smaller changes cost money but they can result in a more valuable home. Now, the growth might not be enormous but the little things can add up and make a difference in the price of your home.

There are dozens if not hundreds of small improvements you can make in your home. The best strategy is to create a room by room checklist and knock them off over a short window of time.

For most, a home is their most prized asset. By investing further in it you are securing your nest egg or retirement plan. This is never a bad idea and a home equity loan is a proven way to achieve this.

If you’re unsure of how you’ll secure a loan, you may not have to look any farther than your home equity. In many cases, a home equity loan will be the cheapest kind of loan. They are also easy to get approved for in many cases.

A home equity loan comes in one of a few forms:

• A second mortgage
• Home equity line of credit (HELOC)
• A reverse mortgage

Reasons Home Equity Might Be The Best Choice

Cheaper

Home equity loans are seen as less risky from your lender’s point of view. Securing a loan with your home equity will usually lead to low interest rates. HELOCs are particularly inexpensive and are a great way to pay for large expenses at a relatively low cost.

Readily Available

Not everyone has access to other collateral to secure loans with. But if you own a home and have at least 20% equity in it, you have a valuable financial asset. The closer you are to having paid off your mortgage, the easier it will be for you to secure a loan.

They Have Many Uses

Unlike many other loan classes, you aren’t very restricted with how you spend your funds. When you take a home equity loan you can use the funds for a wide variety of expenses. The most obvious reason would be to make improvements to your home. But there are several good reasons (and many bad reasons) to secure a loan with your equity.

Good Reasons To Secure With Home Equity

Home Improvement

Using your equity to secure a home improvement is a straightforward financial choice that makes perfect sense. Why wouldn’t you use your home equity to improve your home and increase its value? Tapping into your equity to secure a loan allows you to produce even more equity, or to sell your home at a great profit.

Starting A Business

If you’ve come up with a great business idea, you may want to start a business. But starting a business is difficult, not to mention expensive. This is where a HELOC can help.

A HELOC is a line of credit that allows you to control how much money you want to borrow and when you want to borrow it. Business is inherently risky, so it’s good to have control over your borrowing.

Consolidating Credit Card Debt

Consolidating higher-interest debt is a financially sound reason to tap into your equity. Credit cards make it far to easy to rack up more debt through high interest rates. Rates are notoriously high for credit cards, with most starting at 19%. Some credit cards go as high as 29.99%.

You can use your equity to secure a debt consolidation loan. You would then use the loan to immediately pay off all your credit card balances. The result is you have one large debt to pay off instead of many smaller ones. But your interest rate on a home equity loan will usually be far lower than the rate on your credit card. That means you can save a lot of money and save your credit score at the same time.

Retirement

There is one way to tap into your home equity that stands out for its retirement benefits. A reverse mortgage can help you afford retirement through a repayment-deferred loan. If you’re simply short on cash for retirement, a HELOC is likely your better choice.

Emergencies

If you run into an emergency, none of the options you have will be great. But if you have emergency expenses, your home equity can enable you to pay for them. If you don’t have many other options, a home equity loan is an inexpensive alternative to credit cards or other fast personal loans.

Education

Education expenses are one of the major reasons people take home equity loans. Education is expensive, so you only have a few options for financing. A HELOC or second mortgage can be a good alternative to student loans.

What You Need To Consider

If you have equity in your home, you have the ability to get a good loan. But regardless of the size of your loan and what you’re using it for, you need to perform your due diligence.

The Value Of Your Home Can Decline

If you’re taking a home equity loan to cover your home improvement costs, you won’t necessarily see a significant return. No matter what you do, some forces are beyond your control. External factors can cause the value of your home to drop, even if you work to make it a nicer place to live.

You Still Have A Limit

Many of the uses of home equity loans will save or make you money. Other uses should be approached with caution. Frivolous personal expenses shouldn’t be covered with loans secured with your home equity. Some may claim that an expensive wedding or vacation can be paid for with a home equity loan. While it’s a possibility and a cheaper option, it’s better to save your equity for the expenses that can improve your life long-term. If you’re not careful, you can overspend and put your home at risk of foreclosure.