Despite the recent moderation in home prices, numerous homeowners continue to possess a substantial amount of equity. But what exactly does equity mean? In its simplest form, equity refers to the disparity between the current market value of your home and the outstanding amount of your mortgage. The National Association of Realtors (NAR) elucidates how equity accumulates over time:
"The growth of housing wealth (home equity or net worth) is fostered by price appreciation and mortgage repayment."
Utilizing Your Equity to Accomplish Your Objectives
The equity you accumulate throughout the years can serve as a valuable asset when you decide to sell your current house and purchase a new one. If your current home no longer meets your spatial requirements, it may be an opportune moment to transition to a larger property. Conversely, you might find yourself in a situation where you have excessive space and require something smaller. Regardless of the circumstances, your equity can be a potent tool that empowers you to navigate today's real estate market. This is because it can potentially cover a significant portion, if not all, of your down payment for your next home.
And how much equity you have may surprise you. A recent survey from Realtor.com finds many homeowners today estimate they’ve built up a significant amount of equity:
“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.”
If you’re looking to leverage your equity to boost your buying power in today’s market, having a trusted agent by your side makes a difference.
A real estate professional can help you better understand the value of your home, so you’ll get a clearer picture of how much equity you likely have. As a recent article from Bankrate says:
“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 solid understanding of your equity is key when it comes to making decisions about buying or selling your home. A skilled agent can help you navigate the often-complicated process of selling your house and ensure the transaction goes smoothly.
Today, many homeowners are sitting on a substantial amount of equity, and you may be one of them. Let’s connect so we can estimate how much equity you have and plan how you can use it toward the purchase of your next home.
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