Ways Your Home Equity Can Help You Reach Your Goals

If you’ve owned your house for a couple of years, it’s essential to familiarize yourself with a key concept—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.”

Your home equity increases as you pay down your mortgage and as home values rise. Despite a slight dip in home prices last year, they have rebounded and are on the upswing in many areas. This price growth is positive news for homeowners.

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.”

The reported figure is specific to the past year, and to provide a broader perspective on its cumulative impact, the report highlights that the average homeowner with a mortgage has accumulated over $300,000 in equity. This substantial equity can have significant implications for homeowners.

Here are some ways you can leverage your home equity for various purposes.

1. Buy a Home That Fits Your Needs

Consider moving to a larger home if your current space is insufficient, or downsizing to a smaller one if you have excess space. In either case, use your accumulated equity to contribute to a down payment, aligning your home choice with your evolving lifestyle.

2. Reinvest in Your Current Home

3. Pursue Personal Ambitions

Your home equity can be a catalyst for fulfilling lifelong dreams, whether it’s investing in a new business venture, securing funds for retirement, or supporting education. It’s crucial to use your equity responsibly for meaningful and impactful purposes, avoiding unnecessary spending, to make a positive difference in your life.

4. Understand Your Options to Avoid Foreclosure

Despite foreclosure filings being below the norm, some homeowners face this situation annually. If you encounter financial difficulties, understanding your options is crucial. Your accumulated equity can serve as a financial cushion, providing support if you’re unable to make timely mortgage payments.

Bottom Line

If you’re interested in determining your home equity, let’s connect. I can provide a professional equity assessment report to reveal how much equity you’ve accumulated over time. Subsequently, we can discuss how to strategically use this equity to help you achieve your goals.