Ways Your Home Equity Can Help You Reach Your Goals
If you've been a homeowner for a few years, there's an important concept you should familiarize yourself with: home equity. In case you're not acquainted with the term, Freddie Mac offers the following definition:
. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”
This indicates that your equity increases as you gradually pay off your mortgage and as property values rise. Although home prices experienced a slight dip last year, they have since rebounded and are on the rise in numerous regions. Here's why this price appreciation is advantageous for you.
In the most recent Equity Insights Report, Selma Hepp, Chief Economist at CoreLogic, elaborates:
“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 is solely for the past year. To provide a comprehensive understanding of how this figure accumulates over time, the report also reveals that the average homeowner with a mortgage holds over $300,000 in equity. Such a substantial amount of equity can yield significant effects.
Below are several ways you can leverage your home equity to your advantage:
Tailor Your Living Space to Your Needs If your current residence no longer suits your lifestyle, consider upgrading to a larger home or downsizing to a more fitting one. Utilizing your equity for a down payment can facilitate this transition.
Invest in Your Property If relocation isn't on the horizon, you can reinvest your equity into enhancing your current home. However, it's essential to prioritize upgrades that offer long-term value. A real estate agent can offer valuable insights on which projects will yield the highest return on investment when it comes time to sell.
Pursue Personal Goals Home equity can be a powerful tool for realizing personal aspirations, whether it involves launching a new business, preparing for retirement, or funding education expenses. While it's crucial to use your equity wisely and avoid unnecessary expenditures, investing it meaningfully can have a transformative impact on your life.
Explore Options to Prevent Foreclosure Despite foreclosure rates remaining relatively low, some homeowners still face this risk each year. If you're experiencing financial difficulties, understanding your available options is vital. Your equity can provide a buffer in case you encounter challenges in making timely mortgage payments.
Bottom Line
If you're interested in determining the equity in your home, let's get in touch. By doing so, you'll have access to a professional who can conduct a comprehensive equity assessment report, detailing the amount you've accrued over time. Subsequently, we can discuss strategies for leveraging this equity to assist you in achieving your objectives. When you’re ready, let’s connect.