Homeownership has long been lauded as one of the best ways to build wealth and financial stability. Part of the magic of owning a home lies in the steady accumulation of equity - the monetary difference between the market value of your property and the outstanding amount on your mortgage. Yet, the concept of equity remains nebulous to some homeowners.
At its most basic, equity is akin to the portion of your home that you 'truly' own. As highlighted by the National Association of Realtors (NAR), your housing wealth increases two fold - through property value appreciation and via the regular repayment of your mortgage. Over time, these increments converge into a substantial sum - a treasure chest of sorts that can be utilized to propel you towards your objectives.
Equity is more than just a static number - it's a dynamic financial tool that can be harnessed to serve your specific goals. Perhaps your family has outgrown the confines of your current home, necessitating a move to a more spacious residence. Or maybe you're in the opposite situation, residing in a house that feels too vast after your children have flown the nest. Regardless of your circumstances, your accrued home equity can facilitate a seamless transition to your next dwelling. This sum could form a significant portion, or possibly the entirety, of the down payment on your next home.
The recent survey by Realtor.com reveals that the quantum of equity amassed by homeowners today might be a delightful surprise. This optimistic outlook can be attributed to substantial equity gains driven by home value appreciation over the years.
CoreLogic's Chief Economist, Selma Hepp, reinforces this sentiment by stating that despite slight regional home price declines late in 2022, U.S. homeowners have an average equity of $270,000 - a whopping increase of nearly $90,000 since the start of the pandemic.
To fully leverage your equity in the current housing market, partnering with a seasoned real estate professional can be game-changing. A skilled real estate agent can help you determine the accurate value of your home, thus providing a clear gauge of the equity at your disposal.
As highlighted in a recent article from Bankrate, a professional agent can deliver a realistic estimate of home prices in your region and help you set an optimal price for your current property. Using this information, you can ascertain the extent of your equity, calculate potential net proceeds from a sale, and plan how to channel this wealth towards the down payment and closing costs of your new home.
Having a firm grasp of your equity status is critical when deciding whether to buy or sell a property. The complex journey of selling your house can be made smoother with the guidance of a seasoned real estate agent.
In today's market, a significant number of homeowners are sitting on a substantial nest egg in the form of home equity - and you could be one of them. Reach out to us today so that we can help you estimate your current equity position and strategize how to best employ this wealth for your next home purchase.
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