Ways Your Home Equity Can Help You Reach Your Goals

I’ve you’ve owned your house for at least a couple of years, there’s something you’re going to want to know more about. 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.”

That means your equity grows as you pay down your home loan over time and as home values climb. Home prices dipped slightly last year but have rebounded and are climbing.

“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.” (Equity Insights Report)

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 space no longer meets your needs, it might be time to think about moving to a larger home. Too much space? Downsizing an option?

2. Reinvest in Your Current Home

If you are not ready to move just yet, you can use the equity to improve your current home. But it’s important to consider the long term benefits certain upgrades can bring to your home’s value.

3. Pursue Personal Ambitions

Home equity can also serve as a catalyst for realizing your life long dreams. That could mean investing in a new business venture, retirement, or funding an education. While you shouldn’t use your equity for unnecessary spending, using it responsibly for something meaningful can really make a difference in your life.

4. Understand Your Options to Avoid Foreclosure

The number of foreclosures remains below the norm. However, there are still some homeowners who go into foreclosure each year. If you’re in a tough spot financially, having a clear understanding of your options can help. Equity can act as a cushion if you are not able to make your mortgage payments on time.