Are you contemplating selling your Raleigh home? The current mortgage rates might be giving you pause and make you question the timing of your decision. It’s not uncommon for homeowners to have concerns about selling when facing potentially higher mortgage rates for their next property. If you’re in the same boat, rest assured that while rates are currently high, so is your home equity. Allow Linda Craft Team Realtors to provide you with the information you need.
Bankrate provides an explanation of what equity is and the factors contributing to its growth:
“Home equity is the portion of your home that you’ve paid off and own outright. It’s the difference between what the home is worth and how much is still owed on your mortgage. As your home’s value increases over the long term and you pay down the principal on the mortgage, your equity stake grows.”
In other words, equity is how much your home is worth now, minus what you still owe on your home loan.
What is the Current Home Equity Held by Homeowners?
Lately, your home equity has been increasing at a more rapid pace than you might anticipate. To provide some perspective on the average homeowner’s equity, according to CoreLogic:
“. . . the average U.S. homeowner now has about $290,000 in equity.”
This is due to the significant increase in home prices over the past few years, which accelerated the accumulation of your equity. Although the market is beginning to stabilize, the demand for homes still exceeds the available supply, leading to another increase in home prices.
As reported by the Federal Housing Finance Agency (FHFA), Census data, and insights from ATTOM, a prominent property data provider, a substantial majority of homeowners, approximately 68.7%, have achieved either complete mortgage payoff or possess a minimum of 50% equity in their homes (refer to the chart below for details).
That means nearly 70% of homeowners have a tremendous amount of equity right now.
How Your Equity Alleviates Affordability Worries
In today’s era of affordability challenges, the equity you’ve accumulated can be a significant game-changer when contemplating a move. When you sell your current Triangle area home, the equity you’ve built in it can play a crucial role in making your next home purchase more feasible. Here’s how:
- Consider becoming an all-cash buyer: If you’ve been a long-term homeowner, you may have accrued sufficient equity to purchase your new Raleigh home outright, eliminating the need for a loan and concerns about mortgage rates. The National Association of Realtors (NAR) emphasizes this advantage by stating:
“These all-cash home buyers are happily avoiding the higher mortgage interest rates . . .”
- Consider increasing your down payment: Your accumulated home equity can be applied to boost your down payment for your next North Carolina home, possibly allowing you to make a more substantial upfront payment. This means you’ll need to borrow less money, mitigating the impact of current interest rates. Experian clarifies this aspect by stating:
“Increasing your down payment lowers your principal loan amount and, consequently, your loan-to-value ratio, which could lead to a lower interest rate offer from your lender.”
Bottom Line
If you’re contemplating a move, your accumulated home equity can be a significant advantage, especially in the current market. To determine your current equity and explore how to leverage it for your next Triangle area home, don’t hesitate to reach out. Contact Linda Craft Team Realtors to discuss your options.