When’s the last time you checked the value of your home?
It might not be something you monitor as closely as your bank account, but it’s just as important when it comes to your overall financial health. For most people, their house is their largest asset—and if you’ve owned your home for a few years or more, you could be sitting on more wealth than you realize.
Understanding Home Equity
Home equity is the difference between what your house is currently worth and what you still owe on your mortgage. It builds over time as property values rise and as you steadily pay down your loan.
For example, if your home is valued at $500,000 today and you owe $200,000 on your mortgage, you have $300,000 in equity. And according to Cotality (formerly CoreLogic), the average homeowner with a mortgage now has about $311,000 in equity.
Why Homeowners Are Sitting on Record Equity
There are two major reasons many homeowners have accumulated significant equity:
1. Home Price Growth Has Been Substantial
The Federal Housing Finance Agency (FHFA) reports that home prices have appreciated by more than 57% nationwide over the last five years. If you purchased your home during or before that time, your property’s value has likely increased considerably, often without you needing to lift a finger.
2. Homeowners Are Staying Put Longer
According to the National Association of Realtors (NAR), the average homeowner today remains in their home for about 10 years. This is a notable increase from previous decades. Simply staying in your home and continuing to pay your mortgage has allowed you to build equity over time.
NAR notes that over the past decade, the typical homeowner has gained approximately $201,600 in wealth solely through price appreciation.
How You Can Leverage Your Home Equity
If your home has gained significant value, that equity opens up opportunities you may not have considered. Here are a few strategic ways to use it:
Use Equity Toward Your Next Home
Your current equity could provide a substantial down payment for your next home—or in some cases, allow you to purchase a new home outright with cash. This can make your next move much more financially comfortable.
Invest in Home Improvements
Renovating your existing home can improve your quality of life now and potentially increase your home's future resale value. Strategic updates such as kitchen remodels or energy-efficient upgrades are often wise uses of your equity.
Fund a New Business Venture
If you have aspirations of starting your own business, your home equity could provide the necessary startup capital. Whether it's for equipment, marketing, or other initial costs, leveraging your equity could help turn your entrepreneurial dreams into a reality.
Bottom Line
Your home may be worth far more than you realize—and your equity is more than just a number. It’s a financial tool that can help you achieve your next big goal, whether that's moving to a new home, remodeling your current space, or starting a new business venture.
If you’re curious about your home’s current value and what your equity could do for you, it’s time to connect with a local real estate expert who can guide you through your options.
