Equity Isn't Just a Number - It's Your Financial Freedom Tool
- Kevin Petersen
- Feb 24
- 5 min read
Updated: Feb 25
I was having coffee with a client last month who'd owned her home in Sugar House for three years. She mentioned, almost casually, that her home had appreciated about $120,000 since she bought it.
"That's amazing," I said. "What are you going to do with all that equity?"
She looked at me blankly. "What do you mean, do with it?"
This happens all the time. People know they're "building equity" when they own a home. But they don't actually understand what that means or how to use it.
So let's fix that.
What Equity Actually Is
Equity is simple: it's the portion of your home that you actually own.
If your home is worth $500,000 and you owe $350,000 on your mortgage, you have $150,000 in equity.
That equity grows in two ways:
You pay down your mortgage - Every monthly payment reduces what you owe and increases what you own
Your home appreciates - In Utah, homes have historically doubled in value every 10 years
But here's what most people don't realize: that equity isn't just a number on paper. It's money you can access and use.
The Real Ways People Use Home Equity
When I work with clients in Salt Lake City, here's what they're actually doing with their equity:
1. Buying Their Next Home
This is the most common use. You sell your first home, take that equity, and use it as a down payment on your next one.
For Example: Let’s say you bought a townhome in Murray for $380,000 in 2020. You sold it last year for $530,000. After paying off your mortgage and closing costs, you would have walked away with $110,000. You could then use that as a 20% down payment on a $550,000 single-family home in Millcreek. Without that equity? You’d still be saving for years to afford that down payment.
This is how you upgrade your life without starting from scratch every time.
2. Pulling Cash Out for Emergencies
Life happens. Cars die. Medical bills show up. Jobs disappear.
When you own a home, you have a financial safety net that renters don't have: equity you can tap into when you need it.
Options for accessing equity:
Home Equity Line of Credit (HELOC) - Like a credit card secured by your home, you can borrow what you need when you need it
Cash-out refinance - Replace your current mortgage with a new one for more than you owe, and pocket the difference
Home equity loan - Borrow a lump sum against your equity
For example: If you’d had a $15,000 medical emergency last year. Instead of going into credit card debt at 24% interest, you could open a HELOC at 7% interest. Same emergency, way less financial damage.
3. Investing in the Home Itself
Sometimes the best investment is the home you're already in.
Clients use equity to:
Finish a basement (instant rental income or more living space)
Remodel a kitchen or bathroom (increases home value)
Add an ADU(Accessory Dwelling Unit) in the backyard (rental income or space for aging parents)
Make energy-efficient upgrades (solar panels, new windows, better insulation)
For example: You could buy a house in Rose Park using a $40,000 HELOC to finish your basement and rent it out. The rental income? $1,200/month. That pays your HELOC payment and adds $600/month to your budget.
Your home value also increases by $60,000 because of the added finished space. You spent $40K and added $60K in value while creating ongoing income.
4. Buying Investment Property
This is where it gets really interesting for wealth-building.
Many of my clients use the equity in their primary home to buy their first rental property.
How it works:
You've built up $100,000 in equity in your home
You take out a HELOC or cash-out refinance for $80,000
You use that as a down payment on a $400,000 rental property
The rental income covers the mortgage on the rental property
You now own two properties instead of one
This is how regular people build real estate portfolios. Not by having hundreds of thousands in cash sitting around, but by leveraging the equity they've already built.
5. Starting a Business or Changing Careers
I've had clients use home equity to:
Start their own business instead of staying in a corporate job they hated
Go back to school for a career change
Bridge income gaps during a transition period
Invest in professional development or certifications
When you're a renter and you want to make a big life change, you're stuck with whatever's in your savings account. When you're a homeowner, you have equity you can access to fund that change.
The LGBTQ+ Investing Club Difference
This is exactly why I founded the LGBTQ+ Investing Club here in Salt Lake City.
For too long, queer folks have been left out of wealth-building conversations. We haven't had access to the same family money, the same networks, the same informal education about how money actually works.
But equity is the equalizer.
You don't need to come from money to build equity. You just need to buy a home and give it time to grow.
In our investing club, we talk about:
How to access equity without screwing up your finances
When a HELOC makes sense vs. a cash-out refinance
How to evaluate whether using equity for an investment is worth it
Real numbers from real people doing this successfully
Because wealth-building shouldn't be a mystery reserved for people who grew up around money.
Interested? We’d love to have you. Keep an eye out on my emails or social media for upcoming events.
What You Need to Know Before Tapping Equity
Accessing your equity isn't free money. You're borrowing against an asset you own, and there are smart ways and risky ways to do it.
Smart uses of equity:
Down payment on your next home
Investment property that generates income
Home improvements that increase your home's value
Emergency fund when you have no other options
Business investment with a solid plan and income potential
Risky uses of equity:
Paying off credit card debt without changing spending habits (you'll just rack up more debt)
Buying things that depreciate (cars, vacations, consumer goods)
Speculative investments you don't understand
Anything that doesn't increase your net worth or quality of life long-term
The rule I give my clients: Only tap your equity for things that either make you money, save you money, or significantly improve your life in a lasting way.
How Much Equity Do You Actually Have?
Most people have no idea.
If you bought your home in Salt Lake City 3-5 years ago, you likely have way more equity than you think.
Here's how to find out:
Check your current home value - Zillow and Redfin give estimates, but they're often low. Ask a local realtor (hi!) for a more accurate comparative market analysis.
Check your mortgage balance - Look at your latest mortgage statement or log into your lender's website.
Subtract what you owe from what it's worth - That's your equity.
Example:
Current home value: $580,000
Mortgage balance: $420,000
Your equity: $160,000
If you bought that same home for $480,000 three years ago, you've built $100,000 in equity just from appreciation. Add in the mortgage you've been paying down, and you're sitting on real wealth.
Ready to Talk About Building Equity?
Whether you're a current homeowner who wants to understand how to use what you've already built, or a first-time buyer ready to start building equity, I'm here for honest conversations.
No pressure. No judgment. Just real talk about your money, your goals, and how homeownership fits into your life.
As an inclusive realtor in Utah who works extensively with diverse / LGBTQ+ clients, I help people build wealth in ways that actually fit their lives—not some outdated script about what homeownership "should" look like.
Want to talk about your equity or explore buying your first home? You can bring your questions to my ASK ME ANYTHING LIVE STREAM. See you soon.
Kevin A Petersen is an LGBTQ+ affirming real estate agent serving buyers and sellers throughout the Salt Lake City area. Schedule a no-pressure conversation about your home buying goals.
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