What Is Home Equity & How Can I Use It?

This is one of those topics that they don’t teach you while you are in school. Luckily, you don’t have to figure it out all on your own! We’re happy to help and break down home equity for you.

First things first, let’s start with the basic definition of home equity: it is the difference of what you currently owe on your mortgage and what the current market value of your home is. For example, if your home is currently worth $300,000 and your remaining mortgage balance is $250,000 then you have $50,000 in home equity!

When you first purchase a house, an instant way to build equity in your home depends on your down payment. The more money you put down, the more equity is in your home starting out. Already own your home… Did you know that your equity can increase over time? If you pay more than you owe each month, that’s another great way to boost your home’s equity! If you’re curious to get an idea of what your home equity looks like, you can also look into seeing how much homes in your neighborhood are selling for. Then compare the sold homes features to your home. This will give you a general idea how much your home is worth currently. To get a closer estimate you can always speak to a mortgage expert!

Unfortunately, like all things that go up they must come down… Your home’s equity can even decrease as well. The most uncontrollable variable? The housing market! If your home’s value has dropped significantly low then it will deteriorate your equity. If you do not keep up with your home maintenance you will see the decline in your home’s equity as well. You can most often prevent the decline in your home’s equity if you are taking care of your home and boosting its curb appeal. Luckily, in today’s market homes are increasing drastically! Keep that in mind when looking to purchase a home. To learn more on the latest details of the housing market and the rise in home values in the Orlando area, check out this 2021 Orlando Housing Market Report.

The best part about home equity? If you ask us, it’s like a real estate savings account. Once you have enough built up, you can use it toward consolidating debt, home renovation projects, investments, potentially removing PMI you may have on your mortgage and of course the list goes on!

If you’re interested in seeing how much equity you have, give us a call today 407-278-8888. There is also a 60 second no obligation qualifier tool to the right of your screen! You have multiple options to get started, we hope to speak with you soon.