Understanding how your home equity works

All you need to know about home equity ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ [Better] [Better]( This week’s mortgage rates [Rate chart] [Rate chart]( Source: US average mortgage rates from [FreddieMac]( --------------------------------------------------------------- Better Mortgage Interested in today's rates? [See Better Mortgage rates]( --------------------------------------------------------------- #FundFact In May 2023, the median U.S. home price was $396,100.¹ In the news Homeowners, do you know how much home equity you have? Homeowners, do you know how much home equity you have? If you own a home, it’s helpful to know your home equity. This helps you track how much of your home you own outright and how your investment is appreciating over time. Plus, once you’ve built up enough home equity, you can access it through loan products like a [cash-out refinance or home equity line of credit (HELOC)]( in order to pay for other expenses. What is home equity? What is home equity? [Home equity]( is the difference between the appraised value of your home and what you owe on your mortgage. In other words, you own the percentage of your home that you’ve paid off. As you make payments on your home, the balance of your mortgage shrinks and your equity grows. For example, if your home is worth $250,000 and your current loan balance is $150,000, then you have $100,000 in home equity: $250,000 $250,000 Estimated home value Estimated home value - - $150,000 $150,000 Outstanding mortgage balance Outstanding mortgage balance = = $100,000 $100,000 Home equity Home equity It’s important to keep in mind that when the value of your home changes, so does your equity. Right now, home values are slowly beginning to drop—CoreLogic recently found that the average US homeowner saw their home equity decline by $5,400 year-over-year in the first quarter of 2023; the first annual home equity loss since early 2012.² The good news: In the same report, CoreLogic found that average home equity is still up significantly from the start of the pandemic.³ That means that although the value of homes has dropped, homeowners could still be sitting on more home equity than they realize due to total appreciation. Calculating your own home equity Calculating your own home equity Finding your home value Homes typically appreciate 3% per year.⁴ If you’re curious about determining your own home equity, you can begin by researching the estimated value of your home with an online valuation tool. At Better, we partner with HouseCanary to provide our customers free home search and valuation tools at [better.comehome.com]( Just enter your home address to see its current estimated value! If you’re applying for a loan, the lender will order an appraisal to determine your home’s official market value. Finding your mortgage balance You’ll also want to determine the remaining amount you owe on your mortgage, which you can typically do by contacting your loan servicer, logging onto their website, or checking your mortgage statement. Once you have both those numbers, subtract your mortgage balance from its estimated value to get your home equity. Things to keep in mind when borrowing against home equity Things to keep in mind when borrowing against home equity If you’ve decided you’d like to take equity out of your home, the next step is deciding which loan or line of credit is right for you. Two commons options are a HELOC or cash-out refinance, which you can read about [here](. Like any financial venture, there are a few things homeowners should keep in mind when they borrow against their home equity: - Of course, homeowners should understand that using their home as collateral for a loan puts their home at risk of foreclosure if they’re unable to keep up with their minimum monthly payments. - There will be borrowing costs associated with a HELOC, or cash-out refinance. - HELOCs usually have variable interest rates, meaning your interest can go up based on the market which means higher monthly payments. --------------------------------------------------------------- Better Mortgage Close on a Better HELOC in as little as 3 days⁶ [Apply today]( --------------------------------------------------------------- Press play Follow us on social to stay up to date with the latest mortgage tech, tips, and tools: Watch on [TikTok]( • [Instagram]( • [Facebook]( • [YouTube]( Quiz How much equity do you typically need to have in your home to remove private mortgage insurance? - 20% - 22% - 50% - 100% [Better] [Better] [social]( [social]( [social]( [social]( [social]( ¹Source: [National Association of Realtors]( ² Source: [CBS News]( ³ Source: [CBS News]( ⁴ Source: [Realtor.com]( ⁵ HouseCanary, Inc. is a Licensed Real Estate Brokerage in KS, NM, SC and under the Trade Name ComeHome in AL, AK, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KY, LA, MA, MD, ME, MO, MN, MS, MT, NC, ND, NE, NH, NJ, NV, NY, OH, OK, OR, PA, RI, SD, TN, TX, VA, VT, WA, WI, WV, WY. Trade Name ComeHome Real Estate in MI and UT. Trade Name ComeHome by HouseCanary in AR. HouseCanary, Inc., brokerage information TREC Info About Brokerage Services TREC Consumer Protection Notice California DRE #02113022 AVM Disclosure: An AVM is an estimated sale price for a property. It is not the same as the opinion of value in an appraisal developed by a licensed appraiser under the Uniform Standards of Professional Appraisal Practice. ⁶Assumes borrowers are eligible for AVM to calculate their home value, their loan amount is less than $250,000, and all required documents are uploaded to their Better Mortgage online account within 24 hours of application. Closing timelines may vary. © 2023 Better Holdco, Inc. and/or its affiliates. Better is a family of companies. 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