Hidden Treasure of Home Ownership

You make a mortgage payment each month. Part of that payment is applied to the principal balance of your mortgage. Each month you owe less on the home. The difference between the value of the home and what you owe is called equity. Equity is the difference between what your house is worth in today’s real estate market and how much you currently owe on it. For example, if your home’s present appraised value is $225,000 and your outstanding mortgage balance is $75,000, you have $150,000 of home equity. Lucky you.

If your home has appreciated since the time you purchased it, that increase in value also raises your equity. Over time, the equity in your home could be substantial. The average homeowner gained more than $65,000 in equity over the last 5 years.

Unlike last decade, homeowners are no longer foolishly tapping into that equity. In 2006-2008, many owners used their homes like an ATM by pulling equity out to purchase new cars, jet skis, or lavish vacations. They were pulling out cash (equity) from an appreciating asset, and then spending it on rapidly depreciating items. That is not happening anymore.

Over 50% of Homes Have at Least 50% Equity

The number of homeowners that currently have at least 50% equity in their home is astonishing.  37.1% of all homes in the country are mortgage-free. 62.9% of homes with a mortgage, 25.6% have at least 50% equity. That number has been increasing over the last five years:


By doing a little math, we can see that 53.2% of all homes in this country have at least 50% equity right now. Of all homes, 37.1% are mortgage-free and an additional 16.1% with a mortgage have at least 50% equity.