Home Equity Increases Your Wealth
Homeownership will always be an important part of the American dream, as it provides both financial and emotional stability. But, how exactly does it increase your wealth?
Home equity – the value of your home minus your mortgage balance – is one of the best ways to increase your net worth. Therefore, it should come as no surprise that it makes up a large component of household wealth for many individuals. It’s also a resource you can borrow against to improve your property or pay down other high-interest debts. Plus, it usually grows without you even realizing it – especially in today’s sellers’ market.
Some Home Equity Statistics
Home equity is built through home appreciation and mortgage principal reduction. According to recent national data:
- The average homeowner gained $51,500 in equity over the past year alone
- There was an over 29 percent increase in national homeowner equity on a year-over-year basis.
In Iowa, the average homeowner saw a $15,000 increase in equity over the past year. This equity can be used to fund a move, improve your current home and more. On the other hand, if you have yet to buy a home, understanding how equity works might make you realize how important homeownership can be.