One of the advantages of being a homeowner is the ability to accumulate equity over time. When you sell your home, you can use your equity to purchase your next property. However, before taking advantage of this option, it is important to understand what equity is and how it accumulates. According to Bankrate:
“Home equity is the portion of your home you’ve paid off – in other words, your stake in the property as opposed to the lender’s. In practical terms, home equity is the appraised value of your home minus any outstanding mortgage and loan balances.”
Most Americans Have Significant EquityIf you have owned your home for a while, chances are that you have accumulated some equity without realizing it. According to data from the U.S. Census Bureau and ATTOM, the majority of Americans currently have a substantial amount of equity (see graph below):
Having such large amounts of equity is beneficial to homeowners in various ways. Rick Sharga, Executive Vice President of Market Intelligence at ATTOM, states:
“Record levels of home equity provide security for millions of families and minimize the chance of another housing market crash like the one we saw in 2008.”
Moreover, your home equity increases over time. In addition to providing financial stability while you own your home, it can go a long way toward financing your next property when you decide to sell.
In ConclusionSelling, your home and using your equity can make it easier to purchase your next property. Contact a professional today to determine how much home equity you have and to plan your next move.