What is Home Equity and how to build it?

Equity represents the current market value of your home minus any outstanding mortgage balances you owe. As you make mortgage payments over time, your equity increases.

Many homeowners are surprised to learn just how much equity they’ve accumulated over the years, especially in markets where property values have continued to rise.

Homeowners can utilize their home’s equity through various means, such as a home equity loan or a home equity line of credit (HELOC). According to Consumer Financial Protection Bureau (CFPB) resources, homeowners can use home equity for renovations, debt consolidation, or other major expenses.

How Can You Build Equity? 

Various factors can help to increase the amount of equity in your home. Making regular payments gradually reduces the balance. Home improvements that add value, such as kitchen renovations, updated bathrooms, or energy-efficient upgrades, may also contribute to greater equity over time.

Market conditions can play a role as well. In neighborhoods where home values are rising, homeowners may see their equity grow even without making significant changes to the property.

If you’re curious about learning more, NIHFCU’s home loan specialists are here to help. We can guide you through calculating, exploring your options, and deciding the best way to use this powerful financial tool.