If you’re a homeowner, you might be torn on whether or not to sell your house right now. Maybe that’s because you don’t want to take on a higher mortgage rate on your next home. If that’s your biggest hurdle, understanding your equity may be what you need to help you feel more comfortable making your move.
What Equity Is and How It Works.
Equity is the current value of your home minus what you owe on the loan. And recently, that equity has been growing faster than expected.
Over the last few years, home prices have risen dramatically, giving your equity a big boost very quickly. While the market has started to normalize, there’s still an imbalance between the number of homes available for sale and the number of buyers looking to purchase.
And it’s because homes are in such high demand that prices are back on the rise today. Rob Barber, CEO of ATTOM, a property data provider, explains:
“Equity levels were high even during the recent downturn, and now they are going back up and better than ever.”
How Equity Benefits You in Today’s Market.
With today’s affordability challenges, that equity can be a game changer when you move. Here’s why. Based on data from ATTOM and the Census, nearly two-thirds (68.7%) of homeowners have either paid off their mortgages or have at least 50% equity (see chart below):
That means roughly 70% have a tremendous amount of equity right now.
Once you sell your house, you can use your equity to help with your next purchase. It could be some (if not all) of what you’ll need for your next down payment. It may even be enough to allow you to put a considerably larger down payment on your next home, so you don’t have to finance quite as much.
And, if you’ve been in your current house for years, you may have even built up enough equity to pay in all cash. If that’s true for you, you could avoid borrowing altogether, so you wouldn’t have to worry about today’s mortgage rates.
How To Find Out How Much Equity You Have.
The best way to learn how much you have is to contact a trusted real estate agent for a Professional Equity Assessment Report (PEAR).
Bottom Line.
If you plan to move this year, the equity you’ve gained can make a big impact. Let’s connect with real estate agents in Chicago at KM Realty Group LLC to find out how much equity you have in your current home and how you can use it to fuel your next purchase.
