When you buy a home, you’re not just securing a place to live—you’re also building financial power through home equity. So, what exactly is home equity? According to mortgage giant Freddie Mac, home equity is the difference between your home’s current market value and what you still owe on your mortgage. Think of it as the portion of your home that you truly own, which grows as you pay down your loan and as your property increases in value.

The Growing Trend: Two Out of Three Homeowners Have at Least 50% Equity

Recent data from the U.S. Census Bureau and Attom Data reveals that 67.1% of homeowners—more than two out of three—have at least 50% equity in their homes. Even more impressively, nearly 40% of homeowners own their homes outright, with no remaining mortgage. And for the 28% of homeowners with a mortgage, many have built up more than 50% equity in their properties.

This widespread accumulation of equity provides homeowners with financial flexibility. Whether you’re thinking about upgrading to a new home or looking to lower your monthly expenses, your home equity can be a powerful tool.

How Home Equity Can Help You Move to Your Next Home

Selling your home and tapping into the equity you’ve built up can open doors to new opportunities. With the equity from your current home, you can make a substantial down payment on your next property, potentially reducing the amount you need to borrow. This can be especially helpful if you’re concerned about current mortgage rates impacting your future monthly payments. In fact, depending on your amount of home equity, your new payment might even be less than what you’re paying now.

According to Realtor.com, home listing prices have increased by 40% over the past five years, giving many sellers a significant equity cushion. That extra equity can give you a financial advantage in your next purchase, making it easier to afford a larger or more desirable home.

Cash-Out Refinancing: Use Your Equity for Debt Consolidation

Home equity doesn’t just help when you’re buying a new home. You can also use it to improve your financial situation through a cash-out refinance. By refinancing your mortgage and pulling out some of your equity as cash, you can consolidate higher-interest debt, like credit cards or personal loans. This can be a smart move if the new mortgage rate is lower than the interest rates on your existing debt. Plus, simplifying your payments into one monthly mortgage can help ease your financial burden and improve cash flow.

Start by Finding Out How Much Equity You Have

Wondering how much equity you’ve built up in your home? Start by looking at two numbers: your current mortgage balance and your home’s current market value. You can find your mortgage balance on your latest monthly statement, and if you’re unsure about your home’s value, reach out to us. We’re here to help you run the numbers and explore your options.

We’re Here to Help

Whether you’re planning to purchase a new home or considering a cash-out refinance, our team at MORTGAGEinc is here to guide you. Reach out to us with any questions you have about home financing or refinancing. Let’s work together to make your next move possible!