For those who have owned their homes for a few years, an important aspect to explore is home equity. If this term is new to you, Freddie Mac defines it succinctly:
. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”
This means your equity increases both through mortgage payments and as your Raleigh home’s value rises. Despite a slight dip in home prices last year, many areas have seen a rebound and consistent growth, which is beneficial for homeowners.
Selma Hepp, Chief Economist at CoreLogic, highlights this in the latest Equity Insights Report:
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.”
This growth isn’t just limited to the last year. The report notes that the average homeowner with a mortgage has accumulated over $300,000 in equity. Here are some ways you can leverage this equity.
1. Upgrade or Downsize Your Home
Should your current Triangle area living space no longer suit your needs, your equity can facilitate a move. Whether you’re looking for more room or considering downsizing, your accumulated equity can serve as a substantial down payment for your next Raleigh home.
2. Invest in Home Improvements
If you’re not quite ready to move, consider using your equity to enhance your current home. However, it’s wise to focus on improvements that will add value to your Triangle area home for a future sale. Consult Linda Craft Team Realtors to identify which upgrades will yield the best return on investment.
3. Realize Personal Dreams
Your home equity can also be a resource for fulfilling personal goals, such as starting a business, planning for retirement, or funding education. While it’s crucial to avoid frivolous spending, using your equity thoughtfully can significantly impact your life.
4. Foreclosure Prevention Strategies
In situations where foreclosure is a risk, understanding your options is vital. Home equity can provide a safety net if you’re struggling with mortgage payments, potentially helping to avoid foreclosure.
Bottom Line
To understand your home equity’s full extent, consider a professional equity assessment. Once you know how much equity you’ve built, we can discuss how to use it effectively to meet your objectives. Contact Linda Craft Team Realtors to explore your options.