Ways Your Home Equity Can Help You Reach Your Goals
If you’ve owned your house for at least a couple of years, there’s something you’re going to want to know more about – and that’s home equity. If you’re not familiar with that term, Freddie Mac defines it like this:
“. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”
This means that your ownership stake increases as you gradually repay your mortgage and as property values rise. Although home prices experienced a slight decrease last year, they have since recovered and are on an upward trend in numerous regions. The positive aspect of this price appreciation is explained below.
In the latest Equity Insights Report, Selma Hepp, Chief Economist at CoreLogic, explains:
“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.”
And that amount pertains solely to the previous year. To provide a more comprehensive perspective on how this sum can accumulate over the years, the study additionally reveals that the typical homeowner with a mortgage possesses over $300,000 in equity. Such a substantial equity amount can have a big impact.
Here are a few examples of how you can put your home equity to work for you.
1. Buy a Home That Fits Your Needs
If your current residence no longer caters to your requirements, it might be worth considering a relocation to a larger home. Conversely, if your space feels excessive, downsizing to a smaller abode could be the ideal solution. In either scenario, leveraging your equity for a down payment allows you to invest in a property that aligns better with your evolving lifestyle.
2. Reinvest in Your Current Home
Moreover, if you’re not prepared to relocate at the moment, utilizing your existing equity provides an opportunity to enhance your current residence. However, it’s crucial to contemplate the lasting advantages that specific upgrades can contribute to your home’s overall value. Seeking guidance from a real estate agent can be valuable in determining which projects to prioritize, ensuring you achieve the maximum return on investment when you decide to sell in the future.
3. Pursue Personal Ambitions
Your home equity has the potential to act as a driver for achieving your lifelong aspirations. This might involve channeling it into a new business endeavor, supporting retirement plans, or funding education. While it’s advisable to refrain from using your equity for frivolous expenses, utilizing it responsibly for significant and purposeful endeavors can genuinely have a positive impact on your life.
4. Understand Your Options to Avoid Foreclosure
Although the count of foreclosure filings remains lower than usual, there are still homeowners experiencing foreclosure each year. If you find yourself facing financial challenges, having a comprehensive understanding of your alternatives is crucial. In such situations, equity can serve as a protective buffer, providing support if you encounter difficulties in making timely mortgage payments.
Bottom Line
If you want to know how much equity you have in your home, let’s connect. That way you have someone who can do a professional equity assessment report on how much you’ve built up over time. Then let’s talk through how you can use it to help you reach your goals.
