Your home equity can help you overcome affordability challenges
Are you considering selling your home? You may be unsure if selling your house is the right choice, given today’s mortgage interest rates. Some homeowners are reluctant sell their home and take on a high mortgage rate for their next home. If you are worried about this, know that home equity is also high, even though rates right now are. Bankrate explains what equity is, and how it grows. It’s the difference in what your home is worth compared to how much you still owe on your mortgage. Equity is the difference between what your home is currently worth and how much you still owe. CoreLogic’s report on the average homeowner’s equity helps to contextualize how much they have. . . The average U.S. home owner now has around $290,000. This is because over the last few years, the price of homes increased significantly. These rising prices allowed your equity to increase faster than usual. Despite the fact that the market is beginning to normalize, more people are looking to buy homes than are available. According to the Federal Housing Finance Agency, the Census and ATTOM (a property data provider), nearly two-thirds of homeowners (68.7%), have either paid off their mortgages in full or have at least 50 percent equity (see the chart below). That means that nearly 70% of homeowners currently have a lot of equity. How Equity Can Help You Afford Your Home With today’s affordability issues, your equity could make a huge difference when you decide whether or not to move. You can use the equity in your house to help you purchase your next home after you sell it. You can do this by being an all-cash purchaser. If you have lived in your home for a while, you may have enough equity to purchase a new home without taking out a loan. If this is the case, there’s no need to borrow money or worry about mortgage interest rates. The National Association of Realtors states:
“These cash-only home buyers are happy to avoid the higher mortgage rates. . “Make a bigger down payment. Your equity could be applied to your next downpayment. You may be able to put down a larger sum, allowing you to avoid borrowing as much money. This will make today’s interest rates less of an issue. Experian explains:
Bottom LineIf you are thinking of moving, the equity that you have built up today can make a huge difference. Contact a real estate agent to find out how much equity is in your home and how it can be used for your next house.
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