If you’re contemplating selling your home but are hesitant due to today’s higher mortgage rates, you’re not alone. Many homeowners feel trapped, unsure if making a move is feasible. However, there’s a potential solution that could unlock your equity to make your move a reality—equity already built into your current home.
Understanding Home Equity
Home equity is essentially the difference between your home's market value and the amount you owe on your mortgage. As 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.”
As you pay down your mortgage and home values rise, your equity grows. With recent increases in home prices, you might have accumulated more equity than you realize.
According to recent data from the Census and ATTOM, more than two-thirds of homeowners either own their homes outright or have at least 50% equity.
This means a substantial number of homeowners have significant equity at their disposal.
Leveraging Equity for Your Next Move
Once you sell your home, your equity can help mitigate the impact of current mortgage rates. Danielle Hale, Chief Economist for Realtor.com, explains:
“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 a few ways you can use your equity for your next purchase:
Buy with Cash: If you’ve owned your home for a long time, your equity might be enough to buy your next property outright, eliminating the need for a mortgage and avoiding current rates.
Larger Down Payment: Use your equity to make a substantial down payment on your next home, reducing the amount you need to borrow and easing the impact of today's rates.
The First Step: Assess Your Equity
To determine your equity, you’ll need:
Your current mortgage balance
Your home's current market value
You can find your mortgage balance on your monthly statement. For the market value, you have the option of paying for an appraisal or contacting a local real estate agent who can provide a free, professional equity assessment report (PEAR).
By connecting with me, Teresa Hill, and evaluating your equity, you can uncover opportunities for a move you might have thought was out of reach.
The Bottom Line
To explore how your equity can help facilitate your next move, reach out to me, Teresa Hill. I’m here to assist you in navigating your options and making your next real estate transaction as smooth as possible.
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