Utilizing Your Home Equity To Reach Your Goals
If you've been a homeowner for a few years, there's a crucial aspect you should be informed about - and that's home equity. If the term is unfamiliar, Freddie Mac provides 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 implies that your equity increases as you gradually repay your home loan and property values rise. Although home prices experienced a slight dip last year, they have rebounded and shown an upward trend in numerous regions. Here's why this growth in property prices 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 this figure only pertains to the past year. To provide a deeper understanding of how this number can accumulate over the years, the report also indicates that the average homeowner with a mortgage possesses over $300,000 in equity. Such a substantial amount of equity can wield significant influence.
Consider the following ways you can leverage your home equity to your advantage.
1. Acquire A Home That Suits Your Needs
If your current residence no longer meets your requirements, it may be time to contemplate moving to a larger or smaller home. Regardless of the direction, you can utilize your equity for a down payment on a property that aligns with your evolving lifestyle.
2. Invest In Your Current Home
If you're not ready to relocate, channel your equity into enhancing your existing home. However, it's crucial to weigh the long-term benefits of specific upgrades that can enhance your home's value. Seek guidance from a real estate agent to prioritize projects that yield the highest return on investment when you decide to sell.
3. Pursue Personal Aspirations
Home equity can be a catalyst for realizing lifelong dreams, whether it involves investing in a new business venture, planning for retirement, or funding education. While it's important to use equity responsibly, directing it towards meaningful and impactful endeavors can make a substantial difference in your life.
4. Understand Options To Avoid Foreclosure
Despite the overall decrease in foreclosure filings, some homeowners still face this challenge. If you find yourself in financial distress, a clear understanding of your options is crucial. Equity can serve as a financial cushion if you encounter difficulties in making timely mortgage payments.
To determine the amount of equity in your home, consult with us today. We can conduct a professional equity assessment report, detailing the accumulated equity over time, and guide you on how to use it effectively to achieve your goals.