If you're a homeowner, chances are your home equity has experienced significant growth in recent years. Over time, equity accumulates as your property value appreciates and you make payments on your mortgage. The surge in home prices during the 'unicorn' years has likely contributed more than you might realize.
The latest Equity Insights Report from CoreLogic reveals that the average homeowner currently holds more than $274,000 in equity. Such substantial equity can open doors to various possibilities. Bankrate highlights this in a recent article:
"While the pandemic brought about serious challenges, a silver lining for homeowners was the notable increase in equity. It's essential for any homeowner to comprehend how home equity operates and how to harness its potential."
Here are a few ways you can utilize your home equity to your advantage:
Find a Home That Fits Your Lifestyle
If your existing home no longer suits your needs, it could be the right time to consider a move. Whether you require more space or wish to downsize, your accumulated equity can contribute to a down payment on a home that aligns with your evolving lifestyle. A knowledgeable real estate agent can assist you in evaluating your equity and using it effectively when purchasing your next property.
Enhance Your Current Home
Home renovations are a fantastic option if you're looking to transform your living space without relocating. Renovation projects provide you with the opportunity to tailor your home to your preferences and requirements. However, it's important to consider the long-term impact on your home's value. Rely on the expertise of a real estate professional to guide you on prioritizing renovations that offer the highest return on investment when you eventually sell.
Achieve Personal Aspirations
Home equity can serve as a catalyst for fulfilling lifelong dreams. This could involve investing in a new business venture, funding your retirement, or supporting educational pursuits. Responsible use of your equity for meaningful and impactful endeavors can significantly enhance your life.
Navigate Financial Challenges and Avoid Foreclosure
Although foreclosure filings are currently below average, some homeowners still face the foreclosure process each year. If financial difficulties arise, understanding your options and leveraging your equity can provide a safety net. Your equity can serve as a financial cushion during unexpected challenges that might disrupt your ability to make timely mortgage payments.
Freddie Mac succinctly explains this concept:
"If selling your home is the best solution, utilizing your equity can be an excellent choice. Selling with equity involves using the proceeds from your home's sale at a higher price than your remaining mortgage balance to settle your outstanding mortgage debt."
Your home equity holds the potential to transform your life by funding your needs, fulfilling your aspirations, and even safeguarding against financial hardships. If you're uncertain about the amount of equity you possess, connect with a local real estate professional. They can provide valuable insights to help you plan your next steps effectively.
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