We often talk about home equity, but today I wanted to share some important insights on what it means for Utah homeowners. The remarkable appreciation we've seen since 2020 has created substantial financial security for many homeowners, which can help offset some of the increased costs we’ve seen in recent years.

Table of Contents

• The Equity Advantage

• Understanding Your Loan-to-Value Ratio

• Recent Buyers vs. Established Homeowners

• What This Means For You

• Take Action Today

The Equity Advantage

The pandemic housing boom created an extraordinary situation for homeowners across America. Between March 2020 and June 2022, U.S. home prices rose an astonishing 43% in just 27 months. This dramatic increase has given most homeowners a significant equity buffer.

What does this mean for you? If you purchased your home in 2021 or earlier, you likely have a substantial equity cushion that provides financial security even if the market experiences some fluctuation.

Understanding Your Loan-to-Value Ratio

Your loan-to-value ratio (LTV) is a key financial indicator that compares your mortgage amount to your home's appraised value. According to data from BatchService, Utah’s average LTV currently stands at 71.4%. This means the typical homeowner owns nearly 29% of their home outright.

This equity buffer is particularly strong for those who purchased before summer 2022. Even in a hypothetical scenario where home prices fell by 10%, most mortgage borrowers from 2021 or earlier would still maintain a size-able equity position.

Recent Buyers vs. Established Homeowners

If you purchased your home between summer 2022 and spring 2025, your equity position may be smaller compared to those who bought earlier. Additionally, with today's higher interest rates, recent borrowers are paying less toward principal than those who secured mortgages with rates in the 2-3% range. However, this will even out with time. When you get a mortgage, the lender front loads the interest payments within the first several years. So the longer you own your home, not only will you build more equity, but the more of your monthly payment will go towards principal instead of interest. Because of this, you’ll typically start to see your home equity rise exponentially once you’ve owned your home for 4-7 years.

There are a couple ways you can speed up your equity growth, regardless of what the market is doing.

• Make extra principal payments: By paying an extra $200/month to a $500,000 mortgage with a 6.5% interest, you would pay off your home 4 years and 9 months sooner, and save $177,718 worth of interest over the life of the loan

• Refinance: As mortgage rates adjust, you can always refinance to a lower rate when available.

What This Means For You

If you've owned your home for several years, you're likely sitting on substantial equity that can be leveraged for:

• Purchasing your next home

• Purchasing an investment property

• Home improvements

Take Action Today

Understanding your home equity position is crucial. I'm offering complimentary equity assessments for all my clients this month. If that’s something that would be useful, call me this week to schedule your personal equity review. We'll analyze your current position and discuss strategic options that align with your financial goals.

Your home isn't just a place to live—it's a powerful financial asset if handled correctly. Let's make sure you're maximizing its potential.

Here to serve,

P.S. Do you know someone who might benefit from this information? Please feel free to forward this newsletter to friends or family who are considering a move!