Understanding the Value of Your Home

Your home's value

Homeownership has many benefits - one of the biggest being the opportunity to build wealth over time.

Why is homeownership so important for America's families? Owning a home provides an opportunity to create financial stability, promises independence and instills a strong sense of pride.

The ability to create a space to call your own and that works perfectly for your family is invaluable. But let’s focus on the long-term financial outlook here — specifically how the value of your home can change over time.

Equity and appreciation

As a homeowner, you can create financial stability by building up equity over the years — a critical part of homeownership. You'll do this by paying down your mortgage (through your monthly mortgage payment) and your home's appreciation over time.

Understanding your home's equity

Homeownership has many benefits, including the opportunity to build wealth over time through equity.

Homeownership 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 "wealth" is built, in large part, through the creation of equity.

What exactly is equity?

In the simplest terms, your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.

So, how do you build equity?

You build equity in two ways: by paying down your mortgage over time and through your home's appreciation.

1. Paying your mortgage

Each month, you will make mortgage payments that will decrease the amount you owe on your loan.

2. Appreciation

Over time it is unlikely the value of your property will remain the same as when you originally purchased it. While property values can go up or down, the national average for home appreciation is 3% per year. If you live in a neighborhood where property values are going up overall and you’ve maintained your property well, the amount of your equity will likely increase as well.

Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability. It's important to note that some markets appreciate faster than others. It's also possible for home values to depreciate due to economic conditions, your home not being kept up or a decline in neighborhood home values.


To stay on top of the equity you’re building through your monthly mortgage payments, ask your lender to provide you with your amortization table. This valuable table outlines every monthly payment you’ll make and its contribution toward equity. Equally important, it will show the real cost of the home at the end of your loan term. 

Understanding amortization

Your amortization table is an important tool, outlining every mortgage payment you'll make and its contribution toward equity.

Amortization is a big word, but it’s a simple idea. Put in plain terms, it is the process of paying off debt (your home loan) in equal installments over the term of your loan.

The amortization schedule you received at closing outlines how much of your mortgage payment is applied to principal and interest each month throughout your loan term. This helps you keep track of your balance and understand the true cost of your home over the life of your loan.

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