For most, your house is probably the biggest asset you have. And if you’ve owned your property for a few years (or longer), chances are it’s been quietly building wealth for you in the background. The equity you have in your house is something you might not check nearly as often as your bank account balance. But when it comes to your financial situation, it’s an important asset to factor into your calculations.
Home equity is the difference between what your house is worth and what you still owe on any existing mortgage. It grows over time as home values rise and as you pay down your mortgage each month. Homeowners have record amounts of equity right now, for two main reasons:
1. SIGNIFICANT GROWTH IN HOME PRICES – According to the Federal Housing Finance Agency (FHFA), home prices have jumped by more than 57% nationwide over the last five years. If you purchased your home before (or even during) that period of time, this means your house is likely worth much more now than when you first bought it.
2. LONGER LENGTH OF HOMEOWNERSHIP – The average homeowner stays in their home for about 10 years now, which is longer than it used to be. Over that decade, you have built equity just by making your mortgage payments and riding the wave of rising home values. According to the National Association of Realtors (NAR), the typical homeowner who has owned their home for 10 or more years has accumulated $201,600 in wealth solely from price appreciation!
So, what can you actually do with that equity?
1. USE IT TO HELP PURCHASE YOUR NEXT HOME – Your equity could help you cover the down payment on your next home. In some cases, especially if you are downsizing, it might even mean you can buy your next house with all cash.
2. RENOVATE YOUR EXISTING HOUSE – You can take out a home equity line of credit in order to free up funds to use for remodel projects to make your home better suited for your current needs. And, if you’re strategic about your projects, they could add even more value to your home for when you sell in the future.
3. BUYING AN INVESTMENT PROPERTY – Whether holding long term or flipping fast, investment properties are always a great way to diversify your financial portfolio. A rental home provides opportunities for passive income, as well as tax benefits. Alternatively, a rehab project could allow for quick returns when capitalizing on continued rising home prices.
4. BUILDING AN EMERGENCY FUND – Having a reserve fund for unforeseen expenses can help you avoid having to rely on other forms of credit or loans that can turn into debt. If you have to use a credit card or take out a loan to pay for these expenses, your one-time emergency expense may grow significantly larger than your original bill because of interest and fees.
5. PAYING OFF HIGH-INTEREST DEBT – Cashing in on some equity to pay off high interest debt offers significant benefits, including saving money on regular interest payments, freeing up cash for other financial goals, and improving your credit score.
6. START A NEW BUSINESS VENTURE – Your equity could be exactly what you need for startup costs, equipment, or marketing to get the business you’ve been dreaming of off the ground. A new revenue stream could also help increase your overall earning potential, serving as yet another financial boost.
Chances are, your house is worth a lot more than you realize. Whether you’re thinking about selling, upgrading, investing, or securing your financial future, your equity isn’t just a number. It’s an opportunity. Curious just how much equity you might have? Give our team a call today. We’d love to review a personalized home evaluation with you.
Advertorial originally appeared in May/June 2025