Equity Advantage: Smart Selling Strategies
If you're a homeowner, the decision of whether to sell your house at this moment might be causing some inner conflict. This could be particularly true if you're concerned about taking on a higher mortgage rate for your next property. If this is the primary issue holding you back, gaining a solid grasp of your equity could be the key to feeling more at ease as you contemplate your next move.
Understanding Equity: Its Essence and MechanicsEquity represents the present value of your home minus the outstanding loan amount. Lately, the growth of this equity has outpaced expectations.
Over the past few years, there has been a significant surge in home prices, leading to a rapid escalation in your equity. While the housing market is gradually normalizing, a discrepancy persists between the supply of homes up for sale and the demand from eager buyers. This intense demand is causing prices to once again climb. According to Rob Barber, the CEO of ATTOM, a prominent property data provider:
"Even during the recent economic downturn, equity levels remained high, and currently, they are rebounding stronger than ever."
How Your Equity Can Be a Boon in Today's Real Estate Landscape: Given the current challenges in affordability, your equity can become a transformative factor when you decide to relocate. The rationale is clear. Drawing on insights from ATTOM and the Census, a substantial 68.7% of homeowners have managed to either pay off their mortgages or accumulate at least 50% equity (as depicted in the chart below):
Essentially, approximately 70% of homeowners currently possess a significant share of equity.
Once you choose to sell your residence, your equity becomes a valuable resource for your next acquisition. It can potentially serve as a substantial portion, if not the entirety, of your upcoming down payment. In some cases, it might even be substantial enough to enable you to put down a notably larger down payment on your next property, thereby minimizing your need for financing. Moreover, if you've resided in your current home for an extended period, it's conceivable that your equity has grown to a point where you could make a cash payment in full. Should this apply to your situation, you'd avoid the necessity of borrowing funds and bypass concerns over prevailing mortgage rates.
Determining Your Equity: The Practical ApproachTo ascertain your specific equity amount, the most reliable course of action is to connect with a trusted real estate professional for a comprehensive Professional Equity Assessment Report (PEAR).
As you contemplate your next move, the accumulated equity in your possession could wield significant influence. To unveil the precise extent of equity tied up in your present property and to uncover the ways it can facilitate your upcoming purchase, it's recommended that you engage with a dependable real estate advisor.