Many homeowners today feel trapped by the current high mortgage rates, making the idea of selling and moving less appealing. If you’re in this situation, it might seem like there’s no good solution. However, there’s a potential way to counteract these higher borrowing costs: leveraging the equity in your current home.

What Is Equity?

Equity is essentially the difference between your home's market value and what you owe on your mortgage. As you pay down your mortgage and as home values rise, your equity increases. Recent years have seen significant home price appreciation, so many homeowners have more equity than they might realize.

According to the latest data from the Census and ATTOM, over two-thirds of homeowners have either completely paid off their mortgages or have at least 50% equity in their homes.

How Your Equity Can Help You Move

Your home equity can be a powerful tool when selling your house, helping you navigate higher mortgage rates more easily. Danielle Hale, Chief Economist for Realtor.com, points out that many homeowners are sitting on substantial equity due to rising home prices, which can significantly aid in purchasing your next home.

Here are a few ways to use your equity for your next home purchase:

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  Be an all-cash buyer: If you have significant equity, you might be able to buy your next home outright, avoiding the need for a mortgage and the associated rates.

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  Make a larger down payment: Using your equity for a substantial down payment can reduce the amount you need to borrow, easing the impact of higher mortgage rates.

The First Step: Determine How Much Equity You Have

To understand your equity, you need to know your current mortgage balance and your home’s market value. You can find your mortgage balance on your monthly mortgage statement. For your home’s current value, you could pay for a professional appraisal, but a local real estate agent can provide a comparative market assesment report (CMA) for free.

Once you know your equity, you’re closer to making a move that might have seemed out of reach.

Bottom Line

If you’re interested in finding out how much equity you have and how it can help you make your next move, let’s connect. Your home’s equity could be the key to offsetting higher mortgage rates and making your move possible.