As a homeowner, you possess a valuable asset that can significantly impact your financial situation—the equity in your home. While home prices have stabilized over the past year, many homeowners continue to accumulate impressive amounts of equity. In this blog post, we'll explore the concept of equity, its growth over time, and how you can leverage it to achieve your goals in today's real estate market.

Understanding Equity: Your Wealth Building Block

Equity, in simple terms, represents the difference between your home's market value and the outstanding balance on your mortgage. Over time, equity accumulates through a combination of price appreciation and mortgage payments. The National Association of Realtors (NAR) highlights this wealth-building process:

“Housing wealth (home equity or net worth) gains are built up through price appreciation and by paying off the mortgage.”

Harnessing the Power of Equity: Making Your Move

The equity you've built over the years can serve as a powerful tool when it's time to sell your current house and transition into your next home. Whether you need more space or desire a more manageable property, your equity can provide the necessary financial leverage. In fact, it can be a significant portion, if not all, of the down payment for your new home.

Don't underestimate the potential value of your equity. A recent survey conducted by Realtor.com reveals that many homeowners underestimate the amount of equity they've amassed:

Supporting this sentiment, the latest data from CoreLogic affirms homeowners' confidence in their equity growth. As Selma Hepp, Chief Economist for CoreLogic, explains:

“While equity gains contracted in late 2022 due to home price declines in some regions, U.S. homeowners on average still have about $270,000 in equity, nearly $90,000 more than they had at the onset of the pandemic.”

The Role of a Skilled Real Estate Agent

When it comes to harnessing your equity to enhance your buying power, partnering with a trusted real estate agent can make a world of difference. A skilled agent will help you assess the true value of your home, providing a clear understanding of your equity position. Bankrate emphasizes the importance of an agent's expertise:

“Hiring a skilled real estate agent can give you a realistic estimate of home prices in your area and how to price your current home. Using that figure, you can calculate how much equity you have and what your net proceeds will look like, so you can apply that money toward the down payment and closing costs of your new home.” 

Conclusion

As a homeowner, you hold a significant amount of untapped potential in the form of home equity. Understanding the value of your equity is crucial when making decisions about buying or selling your home. By partnering with a skilled real estate agent, you can navigate the complex process of selling your house with confidence, ensuring a smooth and successful transaction. Let's connect and estimate the equity you have accumulated, so we can plan how to best utilize it toward the purchase of your next dream home.