Your home’s equity enables you to build long-term value, lower debt, and plan for financial opportunities with your property.

One of the key reasons homeowners often have a higher net worth than renters is equity. Equity in a home is the difference between the property's market value and what is still owed on the mortgage. For example, if a home is worth $500,000 and the remaining mortgage is $400,000, the equity would be $100,000.

There are two main ways to increase home equity:

• Lower the amount owed on the mortgage. A common strategy is to make payments every two weeks instead of once a month. By doing this, an extra payment is made each year, which helps reduce the loan balance faster and builds equity more quickly.

• Increase the value of the home. This can be done through improvements such as renovations or finishing a basement. These upgrades can raise the home’s value and, as a result, the equity.

"In some cases, building enough equity can help remove mortgage insurance from a loan."

Equity plays an important role in personal finances:

• It increases net worth, which can be helpful when planning to purchase another property or explore investment opportunities.

• It also provides flexibility. For instance, homeowners can use a home equity line of credit (HELOC) to fund home improvements or have a financial cushion available when needed.

In some cases, building enough equity can help remove mortgage insurance from a loan. Once the equity reaches a certain level, this insurance can be eliminated, which lowers monthly payments. If the original payment amount is maintained even after the insurance is removed, the mortgage can be paid down faster, which further increases equity.

If you want to understand more about equity, how to access it, or how much equity might be ideal when buying a home, feel free to reach out. You can call me at 801-845-9502 or send an email to [email protected]. I look forward to hearing from you