Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Refinance Rates and other Mortgages topics.
When property values go up, they create a difference between the amount you owe on your home and the actual value of the property. This difference works in your favor and makes additional equity available to you if you need it. If you compare refinance rates when property values increase and the refinance rates are lower than your current mortgage rate, it could be a good time for you to refinance your mortgage and take the additional equity out for home improvement.
If you refinance to tap into the equity you created when you paid down some of your principal, you're essentially paying interest twice on the same amount of money. But when you refinance as property values go up, you can borrow only the additional funds that make up the increased property value, which means you avoid paying interest on a portion of your home twice. Then, by investing that borrowed equity into home improvements, you continue to increase the value of your home, all while paying even less interest than you had to begin with. This increases your equity even more and you can either tap into it again to do more improvements and continue to increase your home's value, or you can leave it alone and watch your equity grow.