Understanding Home Equity: Home equity represents the portion of your home that you own. If you’ve paid off your mortgage or purchased your home with cash, you have 100% equity. Otherwise, calculate it by subtracting your mortgage balance from your home’s current market value. For example:
Home value: $350,000
Mortgage owed: $150,000
Appreciation and Wealth Building:
Homes typically appreciate around 4.5% annually. So, the $900,000 house could be worth $1,183,500 in just 7 years.For this examaple we will use a 10% downpayment.
During this time, you’ll likely have paid off approximately $63,000 of your mortgage.
Result: Your net worth likely increased by about $346,500 through homeownership.
Why It Matters:
Building equity means having a valuable asset that appreciates over time.
The more equity you have, the more home you can buy when trading-up.
It’s an essential piece for wealth creation, retirement planning, and trading up to a larger home.
Some homes appreciate faster than others, so don’t make a mistake in buying the wrong home.
Let’s Connect: If you’re interested in building net worth or understanding how to strategically buy homes for equity growth, I’d be happy to discuss different scenarios based on your specific situation. Feel free to reach out!
Or… Let’s Not Connect Just Yet: If you are a DIY’er use this website to get an idea of things. Be sure to use accurate & up to date data.