Equity Is a Game Changer for Homeowners Looking To Sell
For homeowners, the decision to sell their property can often be accompanied by uncertainty, especially when weighing factors like potential increases in mortgage rates for their next home purchase. If this is a concern you're facing, gaining a solid understanding of your home equity could be the key to boosting your confidence and facilitating your decision to move forward.
Deciphering the Concept of Equity and Its Mechanism
Equity, in essence, represents the present value of your home minus the outstanding loan amount. In recent times, the growth of equity has been surpassing expectations, primarily due to significant increases in home prices.
The past few years have witnessed a remarkable surge in property values, leading to a rapid escalation in homeowners' equity. Although the real estate market is gradually stabilizing, a noticeable gap remains between the supply of homes available for sale and the demand from eager buyers. This imbalance in the market dynamics has spurred another round of price increases. As Rob Barber, CEO of ATTOM, a prominent property data provider, aptly puts it:
"Even during the recent economic downturn, equity levels maintained their strength, and now they are rebounding to a more robust state."
Harnessing the Power of Equity in the Contemporary Market
In today's landscape, the significance of accumulated equity cannot be overstated. This holds particularly true given the challenges of affordability that are prevalent. Here's why equity can be a game changer during your move. Drawing insights from data shared by ATTOM and the Census, an impressive 68.7% of homeowners either have their mortgages paid off or possess at least 50% equity in their homes (as illustrated in the chart below):
In essence, this translates to roughly 70% of homeowners currently holding a substantial amount of equity.
Upon selling your existing property, the equity you've accumulated can play a pivotal role in your next property acquisition. It could serve as a substantial portion, if not the entirety, of your required down payment. In fact, it might even empower you to make a larger down payment, thereby reducing the need for extensive financing.
For those who've inhabited their current residence for an extended period, the accrued equity could potentially even enable a cash transaction, eliminating any concerns about prevailing mortgage rates. If this scenario resonates with you, the possibility of sidestepping borrowing altogether becomes a tangible reality.
Unveiling Your Equity: A Step Towards Informed Decision-Making
The most effective way to gauge the extent of your equity is by enlisting the assistance of a reputable real estate agent to provide you with a Professional Equity Assessment Report (PEAR).
If embarking on a new housing journey is on your horizon, the equity you've diligently built up holds immense potential to transform your approach. For a comprehensive understanding of your current home equity and how it can empower your next purchase, establishing a connection with a dependable real estate advisor is a prudent step to take.