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 increase of over 29 percent 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.
If you’re ready to buy a home in Des Moines, contact the Knickerbocker Real Estate Team today.
