Lisa Mailhot | August 6, 2023
If you own a home, your home equity has likely experienced significant growth over the past few years. As your property's value appreciates and you make mortgage payments, your equity steadily increases. This surge is particularly noticeable due to the soaring home prices during the 'unicorn' era, resulting in more substantial gains than you might realize.
CoreLogic's latest Equity Insights Report shows that the typical homeowner now possesses over $274,000 in equity. This considerable equity holds the potential to aid in achieving various objectives. Bankrate underscores this in a recent piece, noting:
“While the pandemic created serious challenges, the silver lining for anyone who owned a home was the sizable equity gain. Understanding how home equity works, and how to leverage it, is important for any homeowner.”
Here are a few instances demonstrating how you can harness the potential of your home equity:
If your present dwelling no longer aligns with your needs, the time might be right to consider relocating to a larger or smaller abode. In either scenario, you can channel your equity towards a down payment on a residence that caters to your evolving lifestyle. Collaborating with a real estate professional can aid in gauging your equity amount and determining its application for your next property acquisition.
Should you desire to alter your living space without moving, renovations present a viable option. Home improvement undertakings allow you to customize your dwelling to match your preferences and personal style. However, it's essential to weigh the long-term value-enhancing potential of specific upgrades. Relying on guidance from a real estate expert ensures optimal choices, maximizing your return on investment when you eventually decide to sell.
Your home equity can also catalyze realizing lifelong aspirations. Whether it entails launching a new business, planning for retirement, or funding education, responsible utilization of equity for meaningful endeavors can significantly impact your life. While extravagant spending isn't advisable, prudent use for impactful goals can create a substantial difference.
Although the number of foreclosure filings remains below average, some homeowners still face this predicament each year. In times of financial adversity, comprehending your options and leveraging your equity becomes imperative. Equity functions as a financial buffer, accessible during unexpected difficulties or situations that may disrupt your mortgage payment schedule.
As elaborated by Freddie Mac:
“If exiting your home is the best option for you, selling with equity may be a good option. When selling with equity, you are using the proceeds from selling your home at a higher price than the amount you owe on your mortgage to pay off your remaining mortgage debt.”
Your home equity possesses a transformative potential for reinvestment, goal pursuit, and safeguarding against foreclosure amidst challenging times. If you're uncertain about the extent of your home equity, let's connect to initiate strategic planning for your next endeavors.
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