Home Equity Can Be a Game Changer When You Sell

<article class="post-932212 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-932212"><span class="entry-date">February 8, 2024</span><div class="entry-header center-block text-center"><h1 class="entry-title">Home Equity Can Be a Game Changer When You Sell</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Home+Equity+Can+Be+a+Game+Changer+When+You+Sell&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fhome-equity-can-be-a-game-changer-when-you-sell%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="Home Equity Can Be a Game Changer When You Sell Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20240208-Home-Equity-Can-be-a-Game-Changer-When-You-Sell.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>Are you on the fence about <a href="https://www.simplifyingthemarket.com/2024/01/09/ways-your-home-equity-can-help-you-reach-your-goals/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">selling your house</a>? While <a href="https://www.simplifyingthemarket.com/2024/01/26/why-its-more-affordable-to-buy-a-home-this-year-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">affordability</a> is improving this year, it’s still tight. And that may be on your mind. But understanding your home equity could be the key to making your decision easier. An article from <em>Bankrate</em> <a href="https://www.bankrate.com/home-equity/what-is-home-equity/" rel="noopener noreferrer" target="_blank">explains</a>:</p>
<blockquote><p><em>“</em><strong><em>Home equity is the difference between your home’s value and the amount you still owe on your mortgage.</em></strong><em> It represents the paid-off portion of your home.</em></p></blockquote>
<blockquote><p><em>You’ll start off with a certain level of equity when you make your down payment to buy the home, then continue to build equity as you pay down your mortgage. You’ll also build equity over time as your home’s value increases.”</em></p></blockquote>
<p>Think of equity as a simple math equation. It’s the value of your home now minus what you owe on your mortgage. And guess what? Recently, your equity has probably grown more than you think.</p>
<p>In the past few years, <a href="https://www.simplifyingthemarket.com/2024/01/23/experts-project-home-prices-will-increase-in-2024/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">home prices</a> skyrocketed, which means your home’s value – and your equity – likely shot up, too. So, you may have more equity than you realize.</p>
<h4><strong>How To Make the Most of Your Home Equity Right Now</strong></h4>
<p>If you’re thinking about moving, the equity you have in your home could be a big help. <a href="https://www.corelogic.com/intelligence/homeowner-equity-insights-q3-2023/" rel="noopener noreferrer" target="_blank">According</a> to <em>CoreLogic</em>:</p>
<blockquote><p><em>“. . . the average U.S. homeowner with a mortgage still </em><strong><em>has more than $300,000 in equity</em></strong><em> . . .”</em></p></blockquote>
<p>Clearly, homeowners have a lot of equity right now. And the latest data from the <a href="https://data.census.gov/cedsci/all?q=mortgage" rel="noopener noreferrer" target="_blank"><em>Census</em></a> and <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/attoms-q4-2023-home-equity-and-underwater-report/" rel="noopener noreferrer" target="_blank"><em>ATTOM</em></a> shows over two-thirds of homeowners have either completely paid off their mortgages (<em>shown in</em> <em>green in the chart below</em>) or have at least 50% equity (<em>shown in</em> <em>blue in the chart below</em>):</p>
<p> <a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240208/20240208-Americans-Sitting-on-Tremendous-Equity-1.png" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240208/20240208-Americans-Sitting-on-Tremendous-Equity-1.png"/></a></p>
<p></p>
<p><strong>That means roughly 70% have a tremendous amount of equity right now.</strong></p>
<p>After you <a href="https://www.simplifyingthemarket.com/2024/02/06/houses-are-still-selling-fast/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">sell your house</a>, you can use your equity to <a href="https://www.simplifyingthemarket.com/2024/01/18/3-key-factors-affecting-home-affordability/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">help you buy</a> your next home. Here’s how:</p>
<ul>
<li><strong>Be an all-cash buyer:</strong> If you’ve been living in your current home for a long time, you might have enough equity to buy your next home without having to take out a loan. If that’s the case, you won’t need to borrow any money or worry about <a href="https://www.simplifyingthemarket.com/2024/01/30/2-of-the-factors-that-impact-mortgage-rates/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">mortgage rates</a>. <em>Investopedia</em> <a href="https://www.investopedia.com/articles/personal-finance/071114/should-you-pay-all-cash-your-next-home.asp" rel="noopener noreferrer" target="_blank">states</a>:</li>
</ul>
<blockquote><p><em>“You may want to pay cash for your home if you’re shopping in a competitive housing market, or</em><strong><em> if you’d like to save money on mortgage interest. It could help you close a deal and beat out other buyers.</em></strong><em>” </em></p></blockquote>
<ul>
<li><strong>Make a larger down payment:</strong> Your equity could also be used toward your next down payment. It might even be enough to let you put a larger amount down, so you won’t have to borrow as much money. <em>The Mortgage Reports</em> <a href="https://themortgagereports.com/18520/20-percent-downpayment-risk-mortgage-interest-rate" rel="noopener noreferrer" target="_blank">explains</a>:</li>
</ul>
<blockquote><p><em>“</em><strong><em>Borrowers who put down more money typically receive better interest rates from lenders.</em></strong><em> This is due to the fact that a larger down payment lowers the lender’s risk because the borrower has more equity in the home from the beginning.”</em></p></blockquote>
<h4><strong>The Easy Way To Find Out How Much Equity You Have</strong></h4>
<p>To find out how much equity you have in your home, ask a real estate agent you trust for a Professional Equity Assessment Report (PEAR). </p>
<h3>Bottom Line</h3>
<p><a href="https://www.simplifyingthemarket.com/2024/01/22/3-must-dos-when-selling-your-house-in-2024/" rel="noopener noreferrer" target="_blank">Planning a move</a>? Your home equity can really help you out. Connect with a local real estate agent to see how much equity you have and how it can help with your <a href="https://www.simplifyingthemarket.com/2024/01/16/why-you-may-want-to-seriously-consider-a-newly-built-home/" rel="noopener noreferrer" target="_blank">next home</a>.</p>
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