Many homeowners looking to sell their home feel like they are stuck between a rock and a hard place. Mortgage interest rates today are higher than today’s home buying interest rates, making it difficult for people to sell and move. You may be in the same boat.
But what if there was a way to offset these higher borrowing costs? Eat. And the money you need is probably already available in your current home in the form of equity.
What Is Equity?
Think of equity as a simple math equation. Freddie Mac explains:
“. . . 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 pay off the loan over time and home prices increase. And thanks to the rapid house price increases we’ve seen in recent years, you could have more than you think. The latest Census and ATTOM data show that more than two-thirds of homeowners have paid off their mortgage (in the green chart below) or have at least 50% home equity (in the blue chart below).
This means that most homeowners today have a revolutionary amount of home equity.
How your capital can help you with your move
When you sell your home, this equity will help you move without worrying about current mortgage interest rates. As Daniel Hale, chief economist at Realtor.com, says:
“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 some ways to use your home equity to buy your next home:
Be a cash buyer: If you’ve lived in your current home for a long time, you may have enough equity to buy your next home without needing to borrow money. This means you won’t have to borrow money or worry about mortgage interest rates.
Make a larger down payment: Your equity can also be used for the next down payment. It might even be enough for you to put down a larger deposit without having to borrow too much money at today’s interest rates.
Step one: Determine how much equity you have in your home
Do you want to know how much capital you have? To do this, you will need two things:
1. Current mortgage balance on your home.
2. The current value of your home
You’ll probably find your mortgage balance on your monthly mortgage statement. To find out your home’s current market value, you can pay hundreds of dollars for an appraisal or contact a local real estate agent who can provide you with an appraisal report. free home (PEAR).
When you contact a trusted local agent and crunch the numbers, you’ll be one step closer to taking a step you might not have thought was realistic – all thanks to financing your.