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Yep: Use equity to renovate
Home improvement is "the No. 1 use" of home equity loans and home equity lines of credit, or HELOCs, says Kelly Kockos, senior vice president of home equity for Wells Fargo in San Francisco.
Second on the list are major purchases, which these days are more likely to be vehicles, appliances or other durables rather than lavish weddings or exotic vacations.
"People are using home equity for what they need versus what they want," Kockos says.
The upside is clear if you bought a home you don't completely love and want to remodel, whether that means an addition, cosmetic changes, kitchen and bathroom updates, finishing a basement or building a garage, suggests Justin Lopatin, vice president of mortgage lending for PERL Mortgage in Chicago.
The opportunity is especially attractive if your home has risen in value so you have a larger equity cushion.
"You can leverage that equity at a low rate to improve your home and make it more comfortable," Lopatin says. "If you can tap into equity without increasing overhead to the point that it's not affordable or comfortable for you, that's a good reason."
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