Your home equity can play an important role in planning your next move, whether that means buying another house, improving the one you own, or pursuing a personal goal. The starting point is understanding what you have and what you want to accomplish.
Home equity builds over time as you make mortgage payments and home prices rise. If you have owned your home through a period of significant price growth while making those payments, you may have built substantial equity.
The CoreLogic Equity Insights Report cited in the original version of this article reported that the average borrower with a home loan had almost $300,000 in equity. That figure describes the borrowers in that report, not the amount you personally have available. Put the focus on your own home and your own goals.
A real estate professional is a key resource for understanding how much equity you have and exploring how you might use it. Before deciding, consider these three possibilities.
1. Buy a Home That Fits Your Needs
A home that worked well when you bought it may no longer fit your lifestyle. Maybe you need more room. Maybe you have more space than you want and would prefer something smaller.
In either case, your equity may help you move into a home that better matches your needs. Start with the reason for moving, then consider how your equity could support that decision.
If You Need More Space
If you want to move into a larger home or upgrade to a house that better suits you, you can put your equity toward the down payment on your next purchase.
Before focusing on a particular house, write down what your current home is missing. What would make your next home a better fit? Which features matter most, and which are simply nice to have?
That list gives your conversation with a real estate advisor a clear direction. Rather than starting with the dream house alone, start with the needs you want that house to meet.
If You Want to Downsize
If your current home has too much space, downsizing may be worth exploring. Your equity could cover some, or possibly all, of the cost of your next home.
Keep that possibility separate from an assumption. Ask a real estate advisor to help you understand how much equity you have and how it could apply toward the home you want to purchase.
The practical question: Would a different home better support the way you want to live, and how could your equity help you make that move?
2. Reinvest in Your Current House
You may like where you live but want to change the house itself. If you are not ready to move, using equity for home improvements is another option.
In the Point survey cited in the original article, 39% of homeowners said they would invest in home improvement projects if they chose to access their equity. Those projects can help you customize your living space to fit your needs and personal style.
Start by identifying what you want to change. Are you trying to make the house better suited to your daily life, update its appearance, or prepare it for an eventual sale? Be clear about your purpose before choosing the project.
Consider Your Needs and Future Buyers
Your preferences matter, but it also helps to think ahead. Some renovations add more value and are more likely to appeal to future buyers than others.
For example, the National Association of Realtors report referenced in the original article found that refinishing or replacing wood flooring has a high cost recovery. That makes flooring one project to discuss with a local professional as you review your options.
Do not treat every improvement as equally valuable. Ask which updates make sense for your home and which are worth prioritizing if you expect to sell later.
A local professional can advise you on projects to consider when seeking the greatest return on your investment at sale. Use that guidance alongside your own reasons for improving the home.
The practical question: Which changes would make your home work better for you, while also taking future buyer appeal into account?
3. Pursue Your Personal Goals
Your equity does not have to support another home purchase or a renovation. It can also help you pursue goals beyond the house itself.
Those goals might include investing in a new business venture, funding an education, or supporting plans for retirement or downsizing. The important distinction is between using equity with a clear purpose and using it for unnecessary spending.
Start by naming the goal. Instead of saying you want to access your equity, explain what you want that equity to help you accomplish. Is it starting a business you have been planning? Paying education costs? Making a change connected to retirement?
Then ask yourself how important that goal is and whether it deserves priority over moving or improving your home. You do not need to pursue every possibility simply because it is an option.
The practical question: Is this a meaningful, long-term goal, or spending that does not support what matters most to you?
Start With Your Equity and a Clear Goal
Home equity can help you make an important change. The right conversation starts with your situation, not a reported average or someone else's plans.
Write down your top priority: moving, improving your home, or pursuing a personal goal. Then reach out to Ed Parcaut to discuss your equity, ask questions, and start planning a practical next step.
