Have you been in your home for a while now and wonder if you have equity in your home? Are you confident you know what home equity is? Technically, home equity is the current value of your home less the balance due on your home loan. Or another way to think about is: what is your home worth minus the amount you still owe on your loan. In this blog post, we’ll dive deeper into what home equity is.
What is Home Equity?
Home equity is one of the best forms of investing accomplished with your home. In most cases, a home’s value increases over time. Whether it’s over months or many years, your home will become a more valuable asset. Not only will your house be a wonderful place to call home and provide a safe haven for you and your family, but it can also provide equity.
Equity isn’t a pile of money sitting somewhere, waiting for you to use. It is, however, available for you to use if you want to refinance your home. When refinancing, you can pull out some of the equity you have on your home to use for other purposes like a remodel or addition on your home. When you sell your home, the equity you have accumulated can be turned into cash or used financially to help buy your next property.
How do I Increase the Equity in my Home
Increasing your home’s equity happens over the years of owning it. By paying down your mortgage, it decreases the amount owed on the property, and in turn, increases your equity. When home prices go up in your area, the value of your home will also increase. If you do not take out any of the equity to use for repairs or other large purchases, you will continue to grow your home’s equity. Certain home improvements can increase the value of your home as well, and in turn, increase the equity your home can have.
What Does Home Equity Mean for Me?
Equity in your home means more value and more security in your dwelling. It means you have a better investment just by living in your house and paying on your mortgage over time. Home equity means you can borrow this money to make another purchase at what can be much lower interest rates than other loans. Home equity also means your home is worth much more than when you purchased it.
While your house’s equity is great, borrowing this equity can be risky putting you in a position of more uncertainty if you don’t know all the risks. Understanding your home equity position and the costs of using its value is vital to adopting a solid plan to take out any of the equity you have built up.
If your home ever loses value during an economic downturn or you have a reason to miss a payment on your home, having less equity can put you in a bind. Make sure to weigh the pros and cons before tinkering with your home’s value and home equity. It’s a powerful benefit when you have good home equity and you want to keep it that way.
Working with an Experienced Memphis Real Estate Agent
When it’s time to sell your existing home or buy a great new place, turn to a highly regarded and well-informed local real estate agent. You want someone that you can trust to give you the best advice and know-how for your new home purchase or sale. Check out my other great articles to help you through your home selling and buying experience here in Memphis. Staging homes for sale is also part of my expertise. Please ask me about it when you reach out.
Take a minute to learn more about me. With over 15 years of top-notch service for my clients, I can guide you with your house sale, new home purchase, or buying a great parcel of land. As a top, licensed real estate agent in the Memphis area, showing you the best properties for you and your family is my goal!
Contact me at (901) 828-8919 or drop me a quick note at firstname.lastname@example.org and we can speak in person about your plans and options. Ask me about seeing homes for sale by video or virtual tour and find the best place for you!
Angie Kelley, Crye-Leike Realtors
(901) 828-8919 or (901) 756-8900