Homeowners Gained $28,000 in Equity Last Year: How Much Did You Earn?

If you own a home, your net worth has probably gone up a lot over the past year. Home prices have been rising, which means you’re building equity much faster than you might think. Here’s how it works.

Equity is the current value of your home minus what you owe on the loan.

Over the past year, there have still been more people wanting to buy than there are homes available for sale, and that’s pushed prices up. That rise in prices has translated directly into increasing equity for homeowners.

How Much Equity Have You Earned over the Past 12 Months?

According to the latest Homeowner Equity Insights from CoreLogic, the average homeowner’s equity has grown by $28,000 in the last year alone. That's a significant boost to your net worth! Imagine waking up one day to find your bank account has an extra $28,000. That's essentially what's happening with your home equity.

Ways to Access Your Equity

Now that you know how much equity you’ve gained, let’s talk about how you can access it. Here are a few types of loans you might consider:

1. Home Equity Loan

A home equity loan allows you to borrow a lump sum of money against the equity in your home. It typically comes with a fixed interest rate and a set repayment term, making it a straightforward option if you need a specific amount of money for a particular purpose.

2. Home Equity Line of Credit (HELOC)

A HELOC works more like a credit card. It gives you access to a revolving line of credit based on your home’s equity. You can draw funds as needed up to a certain limit, and you only pay interest on the amount you’ve borrowed. This can be a flexible option if you have ongoing expenses or projects.

3. Cash-Out Refinance

With a cash-out refinance, you replace your existing mortgage with a new one for a larger amount. You receive the difference between the old and new mortgage in cash. This can be a good option if you want to take advantage of lower interest rates while also accessing some of your home equity.

4. Reverse Mortgage

For homeowners aged 62 and older, a reverse mortgage allows you to convert part of your home’s equity into cash. Unlike a traditional mortgage, you don’t have to repay the loan until you sell the house, move out permanently, or pass away. This can provide additional income during retirement years.

Understanding your options for accessing home equity is an important step in managing your finances. With home values continuing to rise, your equity can be a valuable financial resource. By exploring these types of loans, you can make informed decisions about how best to leverage your home’s increased value.

Remember, each option has its own pros and cons, and it's important to consider your personal financial situation and long-term goals before making a decision. Consulting with a financial advisor can also provide personalized guidance tailored to your needs.