Your Equity Could Make a Move Possible

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Many homeowners looking to sell are currently in a difficult situation. Today's mortgage rates are higher than those on their current home, making it more difficult for them to sell and move. Perhaps you are in the same boat.

What if there was a way to offset the higher borrowing costs? There is. And the money you require is probably already present in your current home in the form of equity.

What is equity?

Think of equity as a simple mathematical equation. Freddie Mac explains.

“. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”

Your equity increases as you pay down your loan over time and home prices rise. And, given the rapid rise in home prices in recent years, you probably have a lot more than you realize.

According to the most recent Census and ATTOM data, more than two out of every three homeowners have either fully paid off their mortgages (shown in green in the chart below) or have at least 50% equity (shown in blue in the chart below).

This means that the majority of homeowners currently have a game-changing amount of equity.

How Your Equity Can Help Power Your Move

After you sell your home, the equity can help you move without having to worry about current mortgage rates. As Danielle Hale, Chief Economist at Realtor.com, says:

“A consideration today's homeowners should review is what their home equity picture looks like. With the typical home listing price up 40% from just five years ago, many home sellers are sitting on a healthy equity cushion. This means they are likely to walk away from a home sale with proceeds that they can use to offset the amount of borrowing needed for their next home purchase.”

Here are some examples of how you can use equity to purchase your next home:

  • Be an all-cash buyer: If you've lived in your current home for a long time, you may have enough equity to purchase your next home without taking out a loan. If that’s the case, you won’t need to borrow any money or worry about mortgage rates.
  • Make a larger down payment: Your equity could be applied to 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 at today’s rates.

The First Step: Determine How Much Equity You Have in Your Home

Want to find out how much equity you have? To do that, you’ll need two things:

  1. The current mortgage balance on your home
  2. The current value of your home

Your monthly mortgage statement will most likely include the mortgage balance. To determine the current market value of your home, you can either pay hundreds of dollars for an appraisal or contact a local real estate agent, who will provide you with a professional equity assessment report (PEAR) at no cost.

Once you've connected with a trusted local agent and run the numbers, you're one step closer to making a move you didn't think was possible - all thanks to your equity.

Bottom line.

If you want to know how much equity you have and how it can help you make your next move, please contact us.

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