American homeowners are sitting on a goldmine on average. Today, we would like to review with our readers some great news regarding the equity you may have in your homes. Equity may be used for several reasons, so it's important to discuss.

 

The fact is the average U.S. homeowner now has more than $290,000 in equity, up from $182,000 before the pandemic. (-Selma Hepp, Chief Economist, CoreLogic).

Almost half of all homeowners are equity-rich because they have at least 50% equity. Equity-rich homes are at a 4-year high. Here's a graph illustrating the rise in equity from 2020's 1st quarter to 2023 2nd quarter. 

Once you become privy to the amount of equity that you have, here are seven things you can do with that equity –

1.       You can become an all-cash buyer. You'll have no mortgage payments, and sellers may be more inclined to accept offers from buyers who make cash offers. It puts you in a stronger position when bidding on your next home.

2.       Ability to give a larger down payment. A larger down payment results in lower monthly mortgage payments and better loan terms (more favorable mortgage interest rates and lower private mortgage insurance costs, ultimately reducing the overall mortgage cost.

3.       Access to assisted living residences. Whether making payments or "buying into" an assisted living facility, having cash after the sale of a home dramatically increases your options.

4.       Buy a home that fits your needs. If your current space no longer meets your needs, it might be time to think about moving to a bigger home. And if you've got too much space, downsizing to a smaller home could be just right. Either way, you can put your equity toward a down payment on a home that fits your changing lifestyle. A real estate agent can help you determine how much equity you've got and how to use it when buying your next home.

5.       Reinvest in your current home. Renovations are a great option if you want to change your living space but aren't yet ready to move. Home improvement projects allow you to tailor your home to match your needs and personal style. But it's essential to consider the long-term benefits certain upgrades can bring to your home's value. Lean on a real estate professional for the best advice on which improvement projects to prioritize to get the greatest return on your investment when you sell later on.

6.       Pursue personal ambitions. Home equity can also serve as a catalyst for realizing your life-long dreams. That could mean investing in a new business venture, retirement, or funding an education. While you shouldn't use your equity for unnecessary spending, using it responsibly for something meaningful and impactful can make a difference in your life.

7.       Understand your options to avoid foreclosure. Today, foreclosure filings remain below the norm, so there's no need to fear a wave of foreclosed homes flooding the market. Unfortunately, some homeowners still experience the foreclosure process each year. If you're facing financial difficulties, clearly understanding your options and how your equity can help is crucial. Equity can act as a financial cushion that can be used in times of unexpected challenges or unforeseen circumstances that may disrupt your ability to make mortgage payments on time.

 

 

If you need to find out how much equity you have in your home, please get in touch with The Linda Hall Team, Century 21 First Choice. We'll help you figure it out and discuss your best options.