Understanding Home Equity: A Valuable Resource in Today's Real Estate Market

Despite the fact that home prices have stabilized in the past year, numerous homeowners still possess a substantial amount of equity. To put it simply, equity refers to the difference between the market value of your home and the outstanding mortgage balance. The National Association of Realtors (NAR) explains how equity increases over time:

“Housing wealth (home equity or net worth) gains are built up through price appreciation and by paying off the mortgage.”

How Your Equity Can Help You Achieve Your Goals

Accumulated equity can be beneficial when you sell your current home and purchase your next one. If you require more space, it might be time to move to a larger home, or if you have excessive space, downsizing could be more suitable. In any case, your equity can be a valuable resource to assist you in making a move in today’s market since it may cover some or all of your down payment for your next home.

You might be surprised at the amount of equity you have. According to a recent survey by Realtor.com, a substantial number of homeowners estimate that they have accumulated a significant amount of equity.

The most recent data from CoreLogic reinforces why homeowners are likely feeling optimistic about the equity they have built up over time. As per Selma Hepp, the Chief Economist for CoreLogic:

“While equity gains contracted in late 2022 due to home price declines in some regions, U.S. homeowners on average still have about $270,000 in equity, nearly $90,000 more than they had at the onset of the pandemic.”

How a Skilled Real Estate Agent Can Help

If you intend to utilize your equity to enhance your purchasing capacity in the current market, having a reliable agent by your side can make a significant difference.

Engaging a real estate expert can assist you in comprehending the value of your home, providing you with a more accurate estimation of your accumulated equity. According to a recent article from Bankrate:

“Hiring a skilled real estate agent can give you a realistic estimate of home prices in your area and how to price your current home. Using that figure, you can calculate how much equity you have and what your net proceeds will look like, so you can apply that money toward the down payment and closing costs of your new home.” 

Having a comprehensive comprehension of your equity is essential when deciding whether to buy or sell your home. A competent agent can aid you in navigating the frequently complex process of selling your home and ensuring a seamless transaction.

Bottom Line

At present, numerous homeowners have accumulated a significant amount of equity, and you might be among them. A real estate agent can assist you in determining your equity amount and devising a plan for utilizing it towards the acquisition of your next home.