Ways Your Home Equity Can Help You Achieve Your Goals
“. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”
That means your equity grows over time as you pay down your mortgage and home values rise. While home prices did fall slightly last year, they quickly recovered and have been rising in many areas since. Here's why price increases are good for you.
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 is only for the previous year. To help you understand how quickly that number can add up, the report also states that the average homeowner with a mortgage has more than $300,000 in equity. That much equity can have a big impact.
Here are a few ideas for putting your home equity to work for you.
1. Buy a Home That Fits Your Needs
If your current living situation no longer meets your needs, it may be time to consider moving to a larger house. And if you have too much space, downsizing to a smaller one may be ideal. In either case, you can use your equity to make a down payment on something that fits your changing lifestyle.
2. Reinvest in Your Current Home
If you are not ready to move just yet, you can use your equity to improve your current home. However, it is critical to consider the long-term benefits that certain upgrades can bring to the value of your home. A real estate agent can advise you on which projects to prioritize in order to maximize your return on investment when you sell later.
3. Pursue Personal Ambitions
Home equity can also be used to help you realize long-held ambitions. This could include investing in a new business, retiring, or funding a college education. While you should not waste your equity, using it responsibly for something meaningful and impactful can make a significant difference in your life.
4. Understand Your Options to Avoid Foreclosure
While the number of foreclosure filings remains below the national average, some homeowners face foreclosure each year. If you are facing financial difficulties, knowing your options can be beneficial. Equity can act as a cushion if you’re not able to make your mortgage payments on time.
Let us talk about it if you want to know how much equity you have in your home. So you will have someone who can do a professional equity assessment report on how much you have accumulated over time. Then we will go over how you can use it to help you achieve your goals.