Unlocking Your Home’s Equity: A Path to Cash Buying Your Next Property
Building equity in your home is more than just an increase in your net worth—it’s a powerful tool that can effectively change your approach to buying your next home. With a significant number of homeowners across the country enjoying record levels of equity, understanding how to utilize this asset could be a huge game-changer.
Understanding Home Equity
First of all, you need to understand what home equity means. It is essentially the current value of your property minus any outstanding mortgage or loans secured by your house. For example, if your home is worth $500,000 and you owe $250,000 on your mortgage, you have $250,000 in equity. This equity accumulates over time as you pay down your mortgage and as the value of your property increases.
The Impact of Equity on Home Selling and Buying
Recent studies from sources like the Census and ATTOM highlight the substantial equity homeowners currently hold. Surprisingly, over two-thirds of homeowners have at least 50% equity in their properties, with CoreLogic reporting an average equity amount of $311,000 per homeowner.
This level of equity is significant, especially in a market where all-cash purchases are becoming increasingly common. The National Association of Realtors (NAR) notes that the percentage of buyers who purchase homes all-cash reached 26% recently, underscoring the growing trend of leveraging equity to avoid mortgages altogether.
The Benefits of Using Equity for Your Next Purchase
Imagine the possibility of buying your next home entirely in cash. This means no mortgage payments, no interest rates to worry about, and often a faster closing process. If you’re curious about your equity and whether it could cover the cost of your next home, consider consulting with a knowledgeable broker, like us, and a real estate agent for a professional equity assessment report (PEAR).
Even if your equity doesn’t fully cover an all-cash purchase, it could substantially increase your down payment, potentially reducing the need for a large loan and improving your buying options.
Bottom Line
Today’s homeowners are in a unique position to make impactful decisions about their next home purchase thanks to substantial equity. Whether it’s buying your next home outright or using equity to strengthen your buying power, exploring your options can be incredibly beneficial. Connect with our team at Colorado Lending Team to discuss how you can leverage your home equity to achieve your real estate goals.
Disclaimer: This article is intended for informational purposes only and should not be considered investment advice. Always conduct your own research and consult with a professional before making any investment decisions.
