Key Takeaways:
- Homeowners are earning dollar-for-dollars gains in their home equity as real estate values continue to increase.
- Due to significantly high home equity levels, many homeowners are considering whether they should refinance their current homes or move to a new one.
- Linda Craft & Team wants you to take advantage of today’s optimal market conditions—give us a call today to discuss the best way for you to utilize your home equity.
Odds Are, Your Home Value Has Increased
With real estate values continually increasing, homeowners’ equity is at an all-time high. According to the U.S. Census, more than 38% of owner-occupied homes are owned outright, meaning they don’t have a mortgage—and even those with a mortgage payment are still seeing their equity skyrocket.
Are you equity-rich?
The first-quarter 2021 U.S. Home Equity Report from ATTOM Data Solutions found that “17.8 million residential properties in the United States were considered equity-rich.” Equity-rich implies that the combined amount of loans secured for a property is 50 percent or less of its estimated market value. This same report concluded that 31.9 percent of the mortgaged homes in the country qualify as equity-rich properties, which is up from 26.5 percent in the first quarter of 2020.
How are you going to use your equity?
The unprecedented surge in home equity has opened up two doors of opportunity for homeowners: they can either refinance their homes and cash out some of the equity or lower their payment, or move to a new home that better fits their needs.
Here’s the reality of refinancing…
Whether you want to refinance to lower your mortgage payment or convert some of your equity to cash and keep your current payment the same, choosing to refinance can be a profitable venture. Refinancing is easy when you have an abundance of equity mixed with record-low mortgage rates. However, many homeowners that could take advantage of these market conditions haven’t yet.
According to an Economic & Housing Research Note, more than five million homeowners with a Freddie Mac-funded loan would benefit from refinancing their loan. These homeowners have average mortgage rates between 4.21% and 6.17%, which are notably higher than the current mortgage rates of about 3%. This means that these homeowners could lower their payments by hundreds of dollars per month or cash out substantial sums of equity.
Does more equity mean you should go ahead and move?
If you’re on the hunt for your dream home, we believe there is no better time than now to use your increased equity as a down payment on your next home. And with today’s ideal market conditions, you could even buy your new home without raising your mortgage payments.
Supposed someone purchased a house for $216,000 in 2006 (the median home price in May of 2006). If they put 10% down and took out a mortgage of $194,400 at 6.41% (the average rate in 2006), then the monthly mortgage payment would’ve been $1,217. According to the National Association of Realtors (NAR), a typical single-family home has increased in value by about $150,000 over the last fifteen years, which means that $216,000 house would be worth approximately $366,000 today.
Need Real Estate Guidance? Let Us Lead!
Whether you’re leaning toward refinancing your current house or moving to a new home, your level of equity could earn you a profit! As the top Realtors in the Triangle, we have all the financing information you need—and we’re here to give you personalized advice anytime. If you have questions about refinancing or want to start searching for your dream home, then contact Linda Craft & Team today. We can’t wait to watch you cash out on your home equity!