If you’re a homeowner in Naperville, chances are your home equity has grown substantially—especially over the last several years. Equity is the difference between your home’s market value and what you still owe on your mortgage. As you make monthly payments and as home values rise—like they did during the recent ‘unicorn’ years—your equity grows. And in markets like Naperville, where property values remain strong, that growth can be even more significant.
Recent data shows the average U.S. homeowner now holds about $313,000 in equity, with approximately $203,000 considered tappable—meaning you can potentially borrow against it while still keeping a healthy equity buffer. That represents a major source of personal wealth, and more importantly, financial flexibility.
As Bankrate explains:
"While the pandemic created serious challenges, the silver lining for anyone who owned a home was the sizable equity gain. Understanding how home equity works, and how to leverage it, is important for any homeowner."
Whether you’re looking to move, renovate, invest in personal goals, or navigate a difficult financial season, your equity can be a powerful tool—if you know how to use it strategically.
Let’s break down four smart, actionable ways to make the most of your home equity today.
1. Buy a Home That Fits Your Needs
As life changes, so do your housing needs. Maybe your family is growing and you need more bedrooms, a larger yard, or a dedicated home office. Or perhaps you’ve reached a stage where the maintenance and upkeep of a large home no longer make sense—and downsizing could offer both financial and lifestyle benefits.
Whatever your situation, home equity can play a key role in making your next move possible. By selling your current property, you can apply the equity you've built toward the down payment, closing costs, or even mortgage rate buydowns on a new home that aligns with your current priorities. This is especially important in today’s market, where leveraging existing equity can significantly reduce the financial burden of relocating.
In Naperville, where property values have risen steadily, many homeowners are sitting on six figures of usable equity without realizing it. This can open up opportunities in different parts of the city or even nearby communities that better match your lifestyle, commute needs, or long-term goals.
Additionally, using your equity for a move can provide financial flexibility—whether you're aiming for a home with more functionality, upgraded amenities, or less maintenance. A local real estate agent can help you determine the market value of your current home, estimate your equity, and guide you through how that translates into buying power for your next property.
Key Insight: Real estate transitions aren’t just about size—they’re about fit. Whether you're upsizing or simplifying, your equity can act as the bridge to a home that truly serves your present and future needs.
2. Reinvest in Your Current Home
If moving isn’t the right choice for you right now, reinvesting in your current home can be a smart and rewarding alternative. Home equity gives you the financial flexibility to fund renovations that enhance both your lifestyle and your property’s future resale value.
Whether it’s a kitchen remodel, a bathroom upgrade, finishing a basement, or adding outdoor living space, improvements like these not only improve day-to-day comfort—they can also significantly boost your home’s market appeal. In Naperville, where buyers often prioritize turnkey homes with updated features, strategic renovations can give your property a competitive edge when it’s time to sell.
That said, not all renovations yield the same return. While cosmetic updates may enhance aesthetics, structural upgrades and energy-efficient improvements often carry higher long-term value. This is where local expertise matters. A trusted real estate professional can help you identify which upgrades are most in-demand in the Naperville market and advise on which investments will likely generate the strongest ROI.
Key Insight: Reinvesting your equity back into your home allows you to create a space that better fits your current needs—while also building additional value for the future. The right updates can enhance your lifestyle now and pay off down the road.
3. Pursue Personal Ambitions
Home equity isn’t just tied to real estate—it can be a launchpad for major life goals. Whether you're looking to start a business, pay for higher education, support a child through college, or accelerate your retirement timeline, tapping into your equity can provide the funding to move those ambitions forward.
For many homeowners in Naperville, the equity accumulated over the years represents one of their largest financial assets. Instead of letting it sit dormant, you can strategically access a portion of that value through options like a home equity loan or home equity line of credit (HELOC). These funds typically offer lower interest rates than personal loans or credit cards, making them a more efficient way to finance large, purposeful expenses.
That said, it’s critical to approach this option responsibly. Using equity to fund high-impact goals—such as building a long-term income stream, acquiring advanced degrees, or investing in your future—can be a wise move. However, using it for short-term consumption or depreciating assets may lead to financial strain.
Key Insight: When used intentionally, your home equity can help turn long-standing goals into reality. It’s about leveraging a valuable asset not just for comfort, but for personal and financial growth. Always consult with a financial advisor before making any major decisions.
4. Understand Your Options to Avoid Foreclosure
While foreclosure filings remain below historic norms, financial hardships still impact homeowners every year—including some in Naperville. If you find yourself struggling to keep up with mortgage payments due to job loss, medical emergencies, or rising living costs, it’s essential to understand that your home equity may offer a lifeline before foreclosure becomes a reality.
Unlike during the 2008 housing crisis, many homeowners today are in a much stronger equity position. This equity can act as a financial cushion, giving you more options than simply defaulting. Depending on your situation, that may include refinancing, negotiating loan modifications, or—if needed—selling the home before it goes into foreclosure.
As Freddie Mac explains:
"If exiting your home is the best option for you, selling with equity may be a good option. When selling with equity, you are using the proceeds from selling your home at a higher price than the amount you owe on your mortgage to pay off your remaining mortgage debt."
This option allows you to protect your credit, preserve remaining funds, and avoid the long-term consequences of foreclosure. In a strong real estate market like Naperville’s, listing your home at market value and tapping into your built-up equity could be the most financially sound path forward.
Key Insight: If you're experiencing financial pressure, don't wait until it’s too late. Your equity may give you room to maneuver—and avoid foreclosure entirely. Speak with a local real estate professional to assess your options quickly and discreetly.
Bottom Line
Home equity is more than just a number on paper—it’s a powerful financial tool that can support major life transitions, long-term investments, and even protect you in times of uncertainty. Whether you're upgrading to a new home, renovating your current space, funding a personal goal, or navigating financial hardship, your equity can give you options and flexibility that renters and new buyers simply don’t have.
If you’re unsure how much equity you’ve built—or how to use it wisely—let’s connect. The Lori Johanneson Team can provide a personalized home equity assessment and guide you through your best next steps based on your goals, your property, and current market conditions in Naperville.
