Are you contemplating selling your home? With concerns about affordability lingering in the housing market, it’s understandable to be hesitant. However, understanding the power of your home equity might just be the key to alleviating those uncertainties.
What exactly is home equity? It’s the disparity between your home’s current value and the outstanding balance on your mortgage. Essentially, it signifies the portion of your home that you truly own. Initially, you establish equity with your down payment, and it accumulates as you steadily pay off your mortgage. Over time, as your home appreciates in value, so does your equity.
In recent years, the housing market has experienced a significant surge in prices, resulting in substantial increases in home values and, consequently, home equity. Many homeowners might be surprised to discover that their equity has grown more than anticipated.
According to CoreLogic, the average homeowner with a mortgage in the United States holds over $300,000 in equity. Moreover, data from the Census and ATTOM reveals that approximately 70% of homeowners either own their homes outright or possess at least 50% equity. This substantial equity pool presents homeowners with numerous opportunities.
So, how can you make the most of your home equity? Here are a couple of strategies to consider:
Become an All-Cash Buyer: If you’ve accrued significant equity over the years, you might have enough to purchase your next home outright, eliminating the need for a mortgage. Being an all-cash buyer can provide a competitive edge in hot housing markets and potentially save money on interest payments.
Increase Your Down Payment: Alternatively, you can use your equity to make a larger down payment on your next home. A larger down payment can lead to better mortgage rates and lower monthly payments, as lenders perceive lower risk when borrowers have more equity upfront.
Determining the amount of equity you have in your home is crucial before making any decisions. If you’re contemplating a move, don’t overlook the value of your home equity. It can serve as a valuable financial resource, whether you’re aiming to purchase your next home outright or secure a more favorable mortgage. Consulting with the Top Shelf Group to assess your equity and explore your options is a prudent step towards making informed decisions in today’s housing market.