Considering selling your Triangle area home but unsure due to the current market conditions? While affordability has seen some improvement, the market remains challenging. However, understanding your home equity might simplify your decision-making process. As described by Bankrate:
Home equity is the difference between your home’s value and the amount you still owe on your mortgage. It represents the paid-off portion of your home.
You’ll start off with a certain level of equity when you make your down payment to buy the home, then continue to build equity as you pay down your mortgage. You’ll also build equity over time as your home’s value increases.”
Think of home equity as a basic arithmetic equation: your Raleigh home’s current value minus the outstanding mortgage balance. Chances are, your equity has increased more than you might expect.
Over recent years, as home prices have surged, so has your home’s value—and consequently, your equity. This means you could have more equity than you realize.
How to Leverage Your Home Equity Effectively
If you’re planning to move, the equity you’ve accumulated can significantly aid your process. According to CoreLogic:
. . . the average U.S. homeowner with a mortgage still has more than $300,000 in equity . . .”
Many homeowners currently hold substantial equity. Data from the Census and ATTOM indicates over two-thirds of homeowners have either completely paid off their mortgages (shown in green in the chart below) or have at least 50% equity (shown in blue in the chart below):
This indicates that approximately 70% of homeowners currently have significant equity.
Once you decide to sell your Raleigh home, this equity can facilitate your next home purchase in several ways:
- Be an all-cash buyer: Long-term homeowners may have amassed enough equity to buy their next home outright. This eliminates the need for loans or concerns about fluctuating mortgage rates. Investopedia notes:
You may want to pay cash for your home if you’re shopping in a competitive housing market, or if you’d like to save money on mortgage interest. It could help you close a deal and beat out other buyers.”
- Make a larger down payment: Using your equity for a larger down payment reduces your borrowing needs. A substantial down payment can secure better interest rates, as it lowers the lender’s risk. The Mortgage Reports states:
Borrowers who put down more money typically receive better interest rates from lenders. This is due to the fact that a larger down payment lowers the lender’s risk because the borrower has more equity in the home from the beginning.”
The Easy Way To Find Out How Much Equity You Have
To determine your exact home equity, consult Linda Craft Team Realtors for a Professional Equity Assessment Report (PEAR).
Bottom Line
If you’re planning to move, your Triangle area home’s equity could be a valuable asset. Connect with Linda Craft Team Realtors to discover how much equity you have and how it can be leveraged for your next property purchase.