Home Equity What is It and What Can You Do with It

Home Equity: What is It and What Can You Do with It?

2 min


America has seen a huge boost in homeownership since 2020, and in the last couple of years, more first-time buyers have purchased houses than at any point during the previous fifteen years. Because of this, many are new to the terms that circle homeownership and need a quick education on phrases that seem to pop up everywhere.

Home equity is an important part of homeownership, so you must get to know its meaning and do everything you can to build it up!

What Is Home Equity?

Home equity is the gap between how much you borrowed to buy your home and how much it’s valued. The more you pay into your home, taking care of the interest and paying off the loan, the more the equity gap will be: therefore, the more value you’ll gain when you eventually sell your property.  

Equity is the part of owning a home that sets it apart from renting because it means that your monthly living expenses aren’t simply falling into a landlord’s pockets.

How Do You Build Home Equity?

You can build equity through multiple ways, all of which take either patience, work, or both. The most obvious is to build equity. This means building onto your property or improving it in some tangible ways that will enhance the property’s value. When someone asks themselves, ‘should I rent or buy a house?’ The idea of endless updating and renovating can scare them away: but it’s more intriguing when you remember how much money it builds into the property.

What Could Negatively Impact Home Equity?

The worst thing for home equity is reducing the value of your property. You can’t help in some instances, like if your home floods due to a 100-year storm or if your neighbors are wrecking their property. You don’t live in an HOA: but it’s vital to remember that most homes have been gaining equity at neck-breaking speed over the last few years, so it’s not hard to imagine that this trend will keep going!

The worst thing you can do for your home equity is refuse to care for the property. For example, if you stop taking care of your lawn, or you do too much to ruin the aesthetics of your property, you’re going to see its value begin to drop, and that gathered equity would diminish.

Home Equity What is It and What Can You Do with It

What Can I Do With Home Equity?

Home equity is fantastic because it can let you either get a home equity loan that will help push it further through improving your property or when you sell, it’s going to be your profits. The longer you keep your home, the larger your home equity. This is why there’s generally a ten-year rule that you shouldn’t sell a property you bought until at least five to ten years after you purchased it to ensure that you get at least something back for your investment.

Your Home is an Investment As Long as You Own It

Take the time to build value into your home, and create a space that will continue to turn profits and leave you headed towards a huge payout when you finally decide to sell.

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Renz Simpao

Hello, I'm Renz Simpao, an Educator, Blogger, and Freelance Digital Marketer who helps different brands to achieve their aim goals with a combined experience of 8 years in B2C, program development, and course training.


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