Unlocking Your Home Equity: A Game-Changer for Your Next Move
If you're a homeowner, the decision of whether to sell your house at this juncture might be a bit challenging. This could stem from concerns about taking on a higher mortgage rate for your future property. If this is your primary concern, getting a grasp on your equity could be the key to feeling more confident about proceeding with your plans.
Understanding Equity and Its Function Equity essentially signifies the current value of your home minus the outstanding loan amount. Remarkably, the growth of this equity has been outpacing expectations recently.
Over the past few years, there has been a significant surge in home prices, leading to a rapid increase in your equity. Although the real estate market is starting to stabilize, there remains an asymmetry between the supply of homes available for sale and the number of prospective buyers in the market. The strong demand for homes has once again pushed prices upwards. Rob Barber, the CEO of ATTOM, a property data provider, offers insight:
"Even during the recent economic downturn, equity levels remained high and are now rebounding stronger than ever."
Leveraging Equity in the Current Market Climate In the context of today's affordability challenges, your equity can act as a game-changing asset when you're ready to make a move. Here's why it matters. According to data from ATTOM and the Census, nearly 70% of homeowners either own their homes outright or possess at least 50% equity (as depicted in the chart below):
This means that a substantial portion of homeowners currently holds a significant amount of equity.
Once you decide to sell your house, the equity you've amassed can be instrumental in facilitating your next property purchase. It could cover some or even all of the expenses for your forthcoming down payment. It might even suffice to enable you to make a substantially larger down payment on your next residence, thereby reducing the amount you need to finance. Additionally, if you've resided in your current home for an extended period, you could potentially have accumulated sufficient equity to afford an all-cash payment. In such a scenario, you'd be able to completely avoid borrowing, alleviating concerns about prevailing mortgage rates.
Determining Your Equity To ascertain your equity, the most effective approach is to enlist the assistance of a reliable real estate agent for a Professional Equity Assessment Report (PEAR).
If you're contemplating a move, the equity you've built up can have a profound impact. To accurately gauge the extent of your equity in your present home and understand how it can be harnessed to support your next property acquisition, don't hesitate to consult a trusted real estate advisor.