Understanding Your Home Equity: Essential Knowledge for Every Homeowner

Thinking about selling your home? The first step to understanding your financial potential for your next move is to determine the equity you have in your current home. Given the significant increase in home prices in recent years, many homeowners may have more equity than they realize. Let's delve deeper into what you need to consider if you're looking to capitalize on your property investment and leverage your equity for your next home.

Home Equity : Definition and Calculation

Home equity refers to the variance between the current value of your home and the outstanding balance on your mortgage. For instance, if your home is valued at $400,000 and your remaining mortgage amount is $200,000, your equity would amount to $200,000.

Recent data from the Census and ATTOM shows Americans have significant equity right now. In fact, more than two out of three homeowners have either completely paid off their mortgages (shown in green in the chart below) or have at least 50% equity in their homes (shown in blue in the chart below):

Today, a growing number of homeowners are experiencing substantial returns on their real estate investments upon selling. With a significant amount of equity, it can serve as a potent resource to propel your next housing transition.

Next Steps to Consider

If you're contemplating selling your home, it's crucial to ascertain the extent of your equity and comprehend its implications for your home sale and potential profits. The most effective approach to gain clarity is to collaborate with your real estate agent and seek advice from a tax professional or financial advisor. A team of knowledgeable professionals can provide tailored insights into your unique circumstances and steer you in the right direction.

Bottom Line

Home prices have gone up, which means your equity probably has too. Let’s connect so you can find out how much you have in your home and move forward confidently when you sell.