Maximize Your Home Equity to Power Your Next Move
Considering selling your house but unsure due to the current market's tight affordability? Home equity might just be the deciding factor for you. Bankrate offers an insightful explanation on home equity:
"Home equity is essentially the value of your home minus any outstanding mortgage amounts. It reflects the portion of your home you truly own. Your initial down payment marks the beginning of your equity, which grows as you pay down your mortgage and as your home appreciates in value over time."
Equity is a straightforward calculation: your home's current value less any remaining mortgage balance. And you might be surprised to learn that your equity has likely increased significantly.
With recent surges in home prices, your property's worth and, consequently, your equity have probably risen substantially, potentially leaving you with more equity than you realize.
Maximizing Your Home Equity Today
Your home's equity can be a significant advantage if you're considering a move. CoreLogic highlights:
"The average homeowner with a mortgage in the U.S. has over $300,000 in equity..."
A substantial number of homeowners today possess considerable equity. Data from the Census and ATTOM indicates that around 70% of homeowners have either entirely paid off their mortgages or have at least 50% equity:
This substantial equity could be pivotal in purchasing your next home post-sale, offering you options such as:
Becoming an all-cash buyer: For those who've significantly paid down their mortgage, using your equity to purchase your next home outright becomes possible, eliminating the need for a loan and concerns over mortgage rates. Investopedia suggests:
"Opting for an all-cash purchase can give you an edge in competitive markets and save on mortgage interest, potentially sealing the deal over other bidders."
Making a larger down payment: Alternatively, your equity can serve as a hefty down payment on your next purchase, reducing your need to borrow and possibly securing more favorable loan terms. According to The Mortgage Reports:
"A larger down payment can lead to better interest rates from lenders, as it lowers their risk with your increased initial home investment."
Determining Your Equity Easily
To gauge your home's equity, consult with a trusted real estate agent for a Professional Equity Assessment Report (PEAR).
If you're planning a move, leveraging your home equity can be an invaluable strategy. Connect with a real estate professional to explore your equity and how it can facilitate your next home purchase