Equity Is a Game Changer for Sellers

If you are a homeowner, you may be debating whether or not to sell your house right now. Perhaps you don't want to take on a higher mortgage rate on your next house. If that's your biggest barrier, understanding your equity may be just what you need to feel more confident about making the move.

What Equity Is and How It Works

Equity is the current value of your home less the loan balance. And, recently, that equity has been expanding far faster than expected.

Home values have risen considerably in recent years, providing a significant increase to your equity very quickly. While the market has begun to normalize, there is still an imbalance between the number of properties for sale and the number of buyers willing to make a purchase. And it's because properties are in such high demand that prices are rising again today. Rob Barber, CEO of ATTOM, a property data provider, explains:

“Equity levels were high even during the recent downturn, and now they are going back up and better than ever.”

How Equity Benefits You in Today’s Market

With today’s affordability challenges, that equity can be a game changer when you move. Here’s why. Based on data from ATTOM and the Census, nearly two-thirds (68.7%) of homeowners have either paid off their mortgages or have at least 50% equity (see chart below):

That means roughly 70% have a tremendous amount of equity right now.

When you sell your home, you can put your equity toward your future purchase. It could be some (or all) of the money you need for your next down payment. It might even be enough to allow you to put down a significantly higher down payment on your next property, allowing you to avoid having to mortgage as much. And, if you've been in your existing home for a long time, you might have enough equity to pay in cash. If that's the case for you, you'll be able to avoid borrowing entirely, which means you won't have to worry about today's mortgage rates.

How To Find Out How Much Equity You Have

The best way to learn how much you have is to reach out to a trusted real estate agent for a Professional Equity Assessment Report (PEAR).

Bottom Line

If you're thinking about making a relocation, the equity you've built up can be really beneficial. Let's talk about how much equity you have in your current house and how you may use it to fuel your future purchase.