Let’s talk about something you probably don’t check as often as your bank account — the value of your home. But honestly, it plays a big role in your overall financial picture. When’s the last time a professional gave you a real look at what your home’s worth?
Think about it — for most folks, your home is probably your biggest asset. And if you’ve had it for a few years (or more), it’s likely been building up value without you even realizing it. Honestly, you might be surprised at how much it’s worth now.
What Is Home Equity?
This kind of hidden wealth is called home equity. It’s basically the difference between what your home’s worth and what you still owe on it. The cool part? It usually grows over time — as your home’s value goes up and as you keep chipping away at your mortgage. Let me give you a quick example to show how it all adds up.
So, let’s say your home’s worth $500,000 and you still owe $200,000 on your mortgage — that means you’ve got $300,000 in equity. Pretty awesome, right? And the truth is, a lot of homeowners right now are sitting on more equity than they realize.
According to Cotality (they used to be called CoreLogic), the average homeowner with a mortgage is sitting on around $311,000 in equity. That’s a pretty big chunk of change!
Why You Probably Have More Than You Think
So, why are homeowners like you sitting on so much equity right now? It really comes down to two big reasons:
1. Big Jump in Home Prices. According to the Federal Housing Finance Agency, home prices have shot up over 57% across the country in the past five years. (Check out the map below — it’s pretty eye-opening!)
And if you bought your home a few years back (or even earlier), chances are it’s worth a lot more now than when you first got it — all thanks to how much home prices have climbed recently.
2. People Are Staying Put Longer. According to the National Association of Realtors, the average homeowner sticks around in their home for about 10 years these days. (Take a look at the graph below — it’s interesting!)
That’s definitely longer than it used to be. And during those 10 years? You’ve been building equity just by paying your mortgage and riding the wave of rising home prices.
So, if you’ve been in your home for that long, here’s how all that hidden price growth has worked in your favor. According to NAR:
“Over the past decade, the typical homeowner has accumulated $201,600 in wealth solely from price appreciation.”
What Could You Actually Do with That Equity?
Just remember, your house is likely your biggest financial asset. If you play your cards right and use your equity smartly, it could lead to some pretty exciting opportunities down the road!
- Think about using it to help buy your next home! Your equity could cover the down payment, and in some cases, it might even let you buy your next house outright with cash!
- Why not renovate your current home to fit your needs better? And if you’re smart with the upgrades, they could actually increase your home’s value if you decide to sell down the road.
- Ever thought about starting that business you’ve always dreamed of? Your equity could be the perfect way to cover startup costs, equipment, or marketing. And that could give your earning potential a nice boost, giving you even more financial opportunities!
Bottom Line
Your house is probably worth more than you think. Whether you're considering selling, upgrading, or just want to explore your options, your equity isn’t just a number – it’s a powerful tool.
If you sold your house and had a nice chunk of equity to play with, what would you do with it? Let’s talk about how to turn your home’s value into your next big step!
