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Writer's pictureJesse Green III

Lottery Ticket: Cash it in (Part 1 of 2)

Many homeowners in the US are sitting on a large amount of unused equity in their homes. According to recent data, the average equity in US homes is around $185k and there is estimated to be around $10 trillion in total home equity across the country.

This large amount of unused equity presents an opportunity for homeowners to invest and increase their wealth. Unfortunately, many homeowners are not taking advantage of this opportunity and leaving their equity unutilized. This can be attributed to a lack of financial literacy or a lack of knowledge about how to access this equity.

In this article, we will discuss how homeowners can use their home's equity as an investment tool and why it is important for them to do so. We will also look at some common ways that people use their home's equity, such as refinancing or using a home-equity line of credit (HELOC).


Here’s the scene, you are staring back and forth between your tv and your lottery ticket. Ticket, back to tv. TV, back to ticket. You are making sure your eyes are telling you the truth. You just won $200,000 from the lottery. Your heart is pumping and adrenaline rushing through your body because this is the most money you’ve had at one time. But then, you do something strange. In the moment of excitement, you take your lottery ticket, and put it in your dresser drawer. As some people know, the lottery ticket is worthless unless it’s exchanged for money. You can’t buy food, buy a car, house, clothes, or anything with just a lottery ticket. What’s the reason you don’t want to cash in your lottery ticket?


I’ve heard several reasons why people don’t cash in their “lottery tickets” (Equity in home). Some say, they want to give the lottery ticket to their kids. Some are afraid to turn in the lottery ticket because the lottery commission will take their home. And some just like to say, “You know, I have a $200,000 lottery ticket.” Whatever the reason, holding on to a lottery ticket may not be the most efficient tactic to grow wealth.


Using a HELOC


Every strategy or example we cover in these articles all have the same underlying theme, which is turning you into a bank. For example, banks may borrow money at 3% but make a return of 8%, which is a profit of 5%. So how can we take unused money in our homes and make a profit? The first step is accessing the money. Qualifying for a Home Equity Line of Credit (HELOC) is different for every bank, but most use credit score, debt-to-income, and home value to qualify applicants.


Once you’re approved for a HELOC, the money must be invested and put to work. With a HELOC, there is a monthly payment amount that is required each month. If the monthly payment is $500, and your investment is making $1,000, then you make a $500 profit. Some people choose to take their money and purchase an investment property, while others buy a business, dividend stocks, bonds, or overfunded life insurance. Every investment should be reviewed to make sure the return is worthwhile.


If you have a credit card, then you understand how a HELOC works. The amount you are approved for is a revolving line of credit. You can use all of the money or a portion of it and invest in whatever you choose. You only pay interest on the amount you take out and once that amount is paid back, feel free to take it out again. For example, you have a $200,000 HELOC, and use $50,000 on an investment. While that money is being invested, you will pay interest on the $50,000 only, and still have $150,000 available. When the investment pays you back, you return the $50,000 to the bank, and no more interest is owed. You are back to $200,000 available credit for your next investment.


The HELOC is a great way to invest with equity in your home while still living in the home. For most people, the majority of their wealth is in their homes, sitting idle. One of the main benefits of owning a home is wealth creation, and most people only buy a home but forget the next step in creating wealth. Remember, don’t leave your lottery ticket in the drawer. Cash it in and create wealth! As always, reach out to us for money options you may consider

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