Maximize Your Home Sales Potential by Leveraging Home Equity

Understanding your home equity can simplify your decision to sell. It represents the portion of your home's value that you own, and can be utilized in various ways, such as selling your current home and buying a new one. Ideally, having enough equity to cover all costs related to the sale and purchase is recommended. Leveraging your home equity to purchase a new home can be facilitated through programs like HomeLight’s Buy Before You Sell. Ultimately, comprehending and utilizing your home equity is crucial for maximizing your selling power and overall profits. An article featured on Bankrate explores this topic.

"Home equity signifies the contrast between the value of your home and the remaining mortgage balance. It denotes the portion of your home that has been fully paid off.

When you make your initial down payment to purchase the home, you establish a baseline level of equity. As you progressively pay down your mortgage, this equity grows. Additionally, over time, you'll accumulate equity as your home's value appreciates."

Consider equity as a straightforward calculation. It's your home's current value minus your outstanding mortgage balance. Surprisingly, your equity may have increased more than you realize.

Over the past few years, there has been a significant surge in home prices, indicating a probable increase in both your home's value and your equity. Consequently, you might have more equity than you are aware of.

Maximizing Your Home Equity Potential Today

Contemplating a move? The equity in your home could prove to be immensely beneficial. According to CoreLogic:

"...the typical homeowner in the United States with a mortgage still holds over $300,000 in equity..."

Homeowners currently possess a substantial amount of equity. Recent data from the Census and ATTOM indicates that over two-thirds of homeowners have either paid off their mortgages entirely or have at least 50% equity in their homes. This demonstrates the significant level of ownership that homeowners have in their properties, providing a strong financial foundation and potential for various opportunities

Roughly 70% of homeowners currently possess a substantial amount of equity.

Following the sale of your house, you can utilize your equity to assist in purchasing your next home. Here's the process:

• Become a cash buyer: If you've resided in your current residence for an extended period, you may possess sufficient equity to purchase your next home outright, without the need for a loan. In such a scenario, you'll be free from borrowing concerns and mortgage rates considerations. According to Investopedia:

"If you're navigating a fiercely competitive housing market or seeking to minimize expenses on mortgage interest, paying cash for your home could be advantageous. This approach might facilitate a swift transaction and give you a competitive edge over other buyers."

• Consider increasing your down payment: Your equity can be allocated towards your subsequent down payment, potentially enabling you to make a larger upfront payment and thereby reduce the need for borrowing additional funds. This approach is explained by The Mortgage Reports:

"Individuals who contribute a larger down payment often qualify for more favorable interest rates offered by lenders. This is attributed to the reduced risk for the lender, as a higher down payment results in the borrower having greater equity in the home right from the start."

A Simple Method to Determine Your Equity Amount

For an accurate assessment of your home equity, request a Professional Equity Assessment Report (PEAR) from a trusted real estate agent.

Bottom Line

Considering a relocation? Leverage your home equity to your advantage. Reach out to a nearby real estate agent to assess your equity and explore its potential benefits for your upcoming home transition.