Make Money From Home

The Average Mortgage Holder Has This Much in Equity. How Do You Stack Up? – The Motley Fool

Image source: Getty Images

Are you sitting on a pile of home equity?


Image source: Getty Images

Are you sitting on a pile of home equity?

Key points

  • Higher home prices have led to an uptick in home equity.
  • Mortgage holders on average have about $185,000 in home equity.
  • There are ways you can use the equity you have in your home to your benefit.

Since 2021, prospective home buyers have been grappling with record-high home prices — and struggling to break into the housing market because of them. But while higher home prices are a bad thing for buyers, they’re a great thing for property owners. Existing homeowners can benefit from having high levels of equity — even if they have no plans to sell.

What is home equity?

You might hear the term “home equity” used a lot, and it refers to the portion of your home you own mortgage-free. If you have a home worth $300,000 with a $200,000 mortgage balance, it means you have $100,000 of equity.

Home equity is way up

Since home values are so high these days, home equity levels have risen on a national level. The average mortgage holder now has around $185,000 in home equity, according to data firm Black Knight.

That said, you may be sitting on more or less equity, depending on the property you own and the balance you have on your mortgage. If you live in a starter home, for example, you may be looking at less equity. Similarly, if you recently bought a home and didn’t make a very large down payment, you may have limited equity in your property.

But as we just learned, it’s pretty easy to figure out how much equity you have in your home. All you really need to do is determine its current market value (which you can find by looking at sites like Zillow or talking to a local real estate agent), subtract the amount of money you owe on your mortgage, and voila — you’ve got your number.

What to do with your home equity

Once you’ve figured out how much home equity you have, the big question becomes what to do with it. And to be clear, “nothing” is a perfectly acceptable answer.

Just because you have a nice amount of equity in your home does not mean you have to put it to work. If you don’t tap that …….


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