We all want to change the wall color of our house some time in the future or buy new furniture pieces for the family den or create a home office. But these home improvement projects come at a hefty price. Most homeowners consider home equity loans to do such updates in their homes. If youâ€™re living in a Miami luxury home, though, it may not be the right time to do that. Before risking foreclosure or bankruptcy, learn exactly when itâ€™s the wrong time to use your home equity.
Sacrificing your sound financial standingÂ
Home equity is the key in creating a long-term financial stability. But using it for a costly upgrade for yourÂ Miami luxury home, especially now that we are in a recession, can compromise your currently good financial status. Itâ€™s natural to feel pressured when youâ€™re living alongside posh properties. Competitive homeowners wonâ€™t even stop until theyâ€™re the envy of the neighborhood. You, however, should think twice before taking a HELOC to make pricey improvements.Â
While living in an exclusive neighborhood and owning a Miami luxury home can definitely qualify you for a home equality line of credit, it doesnâ€™t necessarily mean that you should take one out. There are several things to consider first, including your auto loans, debt, student loans and credit card debt. If you have other types of debt, you should consider those too. Everyday expenses can also be affected if everything falls apart.Â
Being forward-looking and anticipating any financial troubles in the future can help you appreciate what you have right now. Before getting your equity loan, examine how you live first and think if you can still live like that in the next 10 to 20 years.Â
Trying to add value to the homeÂ
There are several home improvement projects that can definitely add value to your home. However, you should first realize if the upgrades can secure you a high bidding price in case you decided to sell.Â
When it comes to large-scale home improvements for your Miami luxury home, the first thing you must put in mind is return of investment. You may feel like changing the kitchen countertops or re-tiling the entire bathroom but if they donâ€™t add anything positive to your homeâ€™s value, youâ€™re just going to waste precious home equity. Remember to check first the current trend in your neighborhood and do some research on the things buyers are looking for before doing pricey upgrades.Â