Using The Equity In Your Home To Move

Selling your home in today’s market might feel like an uphill battle. With mortgage rates higher than what you’re currently paying, it’s tough to justify selling and moving. You might be feeling this struggle too. However, there's a silver lining. The equity you’ve built in your home can help offset these higher borrowing costs.

What Exactly Is Home Equity?

Home equity is the difference between your home's current market value and the amount you still owe on your mortgage. As Freddie Mac puts it:

“. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”

Your equity increases as you make mortgage payments and as home prices rise. With the significant appreciation in home values over the past few years, you probably have more equity than you realize.

According to recent data from the Census and ATTOM, over two-thirds of homeowners have either fully paid off their mortgages or have at least 50% equity in their homes. This means that most homeowners have a substantial amount of equity right now.

Leveraging Your Equity for Your Next Home Purchase

When you sell your home, the equity you’ve built can help you tackle today’s higher mortgage rates more comfortably. Danielle Hale, Chief Economist for Realtor.com, explains:

“A consideration today’s homeowners should review is what their home equity picture looks like. With the typical home listing price up 40% from just five years ago, many home sellers are sitting on a healthy equity cushion. This means they are likely to walk away from a home sale with proceeds that they can use to offset the amount of borrowing needed for their next home purchase.”

Here are a couple of ways to use your equity:

1. Buy Your Next Home Outright: If you have substantial equity, you might be able to purchase your next home with cash, eliminating the need for a mortgage and bypassing high interest rates.

2. Increase Your Down Payment: Use your equity to make a larger down payment on your new home. This can reduce the amount you need to borrow, making it easier to manage today’s mortgage rates.

Interested in how your home equity can facilitate your next move? Give our team a call today for a free home valuation and equity analysis to find out what your home is worth and how much equity you have! 

To learn more about using your home equity to help move, take a look at this article from Keeping Current Matters.