The Power of Home Equity
If you've been a homeowner for a few years, delving into the realm of home equity can be a game-changer. In simple terms, home equity, as defined by Freddie Mac, is:
“. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”
As you steadily pay down your mortgage and witness the rise in home values, your equity grows. Despite a slight dip in home prices last year, a swift rebound has been witnessed in many areas. Here’s why this upward trajectory in home values is excellent news for you.
In the recent Equity Insights Report, Selma Hepp, Chief Economist at CoreLogic, highlights:
“With price gains continuing to help homeowners build wealth, equity has reached a new high and regained losses that resulted from declines last year. And while the average U.S. homeowner gained over $20,000 in additional equity compared with the third quarter of 2022, some markets are seeing larger increases as price growth catches up.”
This figure is just for the past year, emphasizing how these numbers accumulate over time. To put it into perspective, the report notes that the average homeowner with a mortgage now holds more than $300,000 in equity, signifying substantial financial potential.
Now, let’s explore how you can leverage your home equity:
1. Find a Home That Fits Your Needs
Should your current home no longer align with your lifestyle, your accrued equity becomes a valuable resource. Whether moving to a larger space or downsizing, you can use your equity for a down payment on a home that suits your evolving needs.
2. Reinvest in Your Current Home
If you're not ready to move, consider enhancing your existing home with your accrued equity. Prioritize projects that promise long-term benefits and increased property value. A real estate agent can guide you on which upgrades will yield the highest return on investment when you decide to sell.
3. Pursue Personal Ambitions
Home equity can act as a catalyst for realizing your dreams, such as starting a business, funding education, or planning for retirement. Responsible use of your equity for meaningful endeavors can make a significant positive impact on your life.
4. Navigate Financial Challenges
While foreclosure numbers remain below average, unforeseen financial challenges can arise. Understanding your options is crucial. Your equity can serve as a buffer if you find it challenging to meet mortgage payments on time.
If you're curious about your home equity, a professional equity assessment report can provide insights into the value you've built up over time. Let us help you strategically use your equity to help you achieve your goals!
