Homeowner Equity on the Rise

Homeowner equity is one of the most powerful, and least noticed, ways owning a home builds wealth.

Building financial wealth and stability remains one of the top reasons Americans choose to own a home, and as a homeowner, your wealth often grows without you even realizing it. The principal portion of your monthly mortgage payment reduces your loan balance and builds equity, functioning much like an automatic savings account: that payment isn’t money going out, it’s money staying in.

Equity Comes From More Than Just Payments

Home equity, the difference between the value of your home and what you currently owe, isn’t just built through your monthly principal payments. Home price appreciation plays a vital role in growing your equity and, ultimately, your wealth. Building equity through both principal payments and appreciation is a critical part of homeownership that helps create long-term financial stability.

Homeowners Continue to See Equity Increase

Recent housing market data shows continued growth in equity amid strong home price appreciation, with average equity gains in the tens of thousands of dollars per mortgaged home and total U.S. homeowner equity reaching into the trillions.

Equity Provides Homeowners With Flexibility

In addition to being a critical tool in building wealth, a homeowner’s equity also provides significant flexibility. When you sell your house, the accumulated equity comes back to you in the sale. Rising home equity combined with favorable mortgage rates can make it the perfect time for homeowners looking to make a move, whether that’s upsizing to a larger home or simply cashing in on years of appreciation.

Home equity has always been a powerful wealth-building tool, and homeowners continue to see their financial stability increase. Let’s connect today so you can better understand how much equity you have in your current home, or whether you’re ready to take the next step in building your savings as a homeowner.

Putting your homeowner equity to work

Know your number

Estimate your home’s current value from recent nearby sales, then subtract your loan balance. That is your approximate homeowner equity.

Use it to move up or downsize

Equity can fund a larger down payment on your next home or let you buy a smaller one with little or no mortgage.

Borrow carefully

Home equity loans and lines of credit can fund improvements, but they add debt. Talk with a lender and a tax professional before tapping your homeowner equity.

Related reading: What will I actually walk away with? · Timing a move-up sale in Kansas City

Source: Consumer Financial Protection Bureau

Questions about your own situation? Call or text Bryan Bechler, Compass Realty Group, at 816-547-0893.