The post-pandemic surge in demand for homes means that home prices continue to remain high. That’s a tremendous asset for existing homeowners. Statistics show that in the first quarter of 2022 almost 45% of homeowners have at least 50% equity in their homes known as equity rich. That’s a 13% increase over this time just a year ago.
Experts believe home prices will continue rising; however, the cost of homes is expected to moderate as interest rates and inflation rise decrease the demand while the supply of new homes increases with construction of new homes up 8% over the first quarter of 2021.
This demand has contributed to the increase in home equity which is good news for current homeowners. Equity is an important financial tool and one of the biggest benefits of owning a home. Here are a few options to consider to capitalize on the equity of your home.
1) Buy a new home – your home’s equity may allow you to make a substantial profit on the sale of your current home which you can use to make a bigger down payment on your next home, lowering your monthly payment and building instant equity in your new home.
2) Retirement – if you’re 62 or older and considering retirement a reverse mortgage will allow you to stop making mortgage payments and either receive a lump sum or monthly income based on your home’s equity.
3) Refinance, home equity loan or line of credit – if you’re planning on staying in your home long term these options allow you to use the money from your equity for a range of financial needs.