{"id":3352,"date":"2021-01-06T05:00:17","date_gmt":"2021-01-06T11:00:17","guid":{"rendered":"https:\/\/nwiloanguy.com\/blog\/the-importance-of-home-equity-in-building-wealth\/"},"modified":"2021-01-06T05:00:17","modified_gmt":"2021-01-06T11:00:17","slug":"the-importance-of-home-equity-in-building-wealth","status":"publish","type":"post","link":"https:\/\/nwiloanguy.com\/blog\/the-importance-of-home-equity-in-building-wealth\/","title":{"rendered":"The Importance of Home Equity in Building Wealth"},"content":{"rendered":"

\"The<\/p>\n

Homeownership has always been the first rung on the ladder leading to household wealth. As Freddie Mac<\/em> recently posted<\/a>:<\/span><\/p>\n

\n

\u201cHomeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This \u2018wealth\u2019 is built, in large part, through the creation of equity\u2026Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.\u201d<\/em><\/p>\n<\/blockquote>\n

Home equity is the difference between the current market value of your house and the amount you currently owe on your mortgage. To estimate your equity, subtract your mortgage balance from the market value of your home.<\/p>\n

You can find what you owe on your mortgage by looking at your last monthly statement or by contacting your lender. If you need help determining the current market value of your home, contact a local real estate professional.<\/p>\n

Is homeownership truly a better path to wealth than renting?<\/strong><\/h4>\n

Some argue that renting eliminates the cost of property taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs (property taxes, repairs, insurance, etc.) are already baked into the rent payment \u2013 along with a profit margin. You don\u2019t save money by renting.<\/p>\n

As proof of this, First American<\/em> broke down the net worth<\/a> of homeowners and renters by income categories. Here are their findings:\"The<\/a>Only one income category ($127-192K) has a higher net worth for renters over homeowners. Every other category shows that being a homeowner leads to greater accumulated wealth.<\/p>\n

According to the latest Homeowner Equity Insights Report<\/a> from CoreLogic<\/em>, the average homeowner gained $17,000 in equity<\/strong> in just the last year. Here\u2019s a breakdown of the year-over-year equity gain by state:\"The<\/a><\/p>\n

When can you cash in on your housing wealth?<\/strong><\/h4>\n

Your home equity is part of your total wealth as a homeowner. The two most common ways homeowners can leverage their wealth are:<\/p>\n