Maximizing Your Home Equity: A Game-Changer in Selling

Home Equity Can Be a Game Changer When You Sell

re you hesitant about selling your home? While affordability has seen improvements this year, it remains a concern. However, considering your home equity could provide the clarity needed to ease your decision-making process. As explained in an article by Bankrate:

"Home equity is the difference between your home’s value and the remaining mortgage amount, representing the portion of your home that is fully paid off. Your equity begins with the down payment when purchasing the home and grows as you pay down the mortgage, alongside the increase in your home's value over time."

Think of equity as a straightforward equation – your home's current value minus the outstanding mortgage balance. Surprisingly, your equity may have increased more than you realize, especially with recent surges in home prices. This suggests a rise in your home's value and, consequently, your equity.

How To Make the Most of Your Home Equity Right Now

If you’re thinking about moving, the equity you have in your home could be a big help. According to CoreLogic:

“. . . the average U.S. homeowner with a mortgage still has more than $300,000 in equity . . .”

Clearly, homeowners have a lot of equity right now. And the latest data from the Census and ATTOM shows over two-thirds of homeowners have either completely paid off their mortgages (shown in green in the chart below) or have at least 50% equity (shown in blue in the chart below):

 

That means roughly 70% have a tremendous amount of equity right now.

After you sell your house, you can use your equity to help you buy your next home. Here’s how:

  • Be an all-cash buyer: If you’ve been living in your current home for a long time, you might have enough equity to buy your next home without having to take out a loan. If that’s the case, you won’t need to borrow any money or worry about mortgage ratesInvestopedia states:

“You may want to pay cash for your home if you’re shopping in a competitive housing market, or if you’d like to save money on mortgage interest. It could help you close a deal and beat out other buyers.

  • Make a larger down payment: Your equity could also be used toward your next down payment. It might even be enough to let you put a larger amount down, so you won’t have to borrow as much money. The Mortgage Reports explains:

Borrowers who put down more money typically receive better interest rates from lenders. This is due to the fact that a larger down payment lowers the lender’s risk because the borrower has more equity in the home from the beginning.”

The Easy Way To Find Out How Much Equity You Have

To find out how much equity you have in your home, ask a real estate agent you trust for a Professional Equity Assessment Report (PEAR). 

Bottom Line

Considering a relocation? Leverage your home equity for assistance. Reach out to a nearby real estate agent to determine the extent of your equity and explore how it can be advantageous for your upcoming home transition.

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