If you’ve been thinking about selling your home but today’s home prices and mortgage rates have you wondering whether a move makes financial sense, there’s one number you shouldn’t overlook:
Your home equity.
Many homeowners have owned their homes for years without checking what their property is actually worth in today’s market. And that means they may be sitting on significantly more equity than they realize.
Understanding that number could completely change the way you look at your next move.
You May Have More Equity Than You Think
Home equity is essentially the difference between your home’s current market value and what you still owe on your mortgage.
Over time, you can build equity in two important ways: by paying down your mortgage and as your home increases in value.
And after years of home price appreciation, many homeowners have accumulated substantial equity.
According to Cotality data highlighted by Keeping Current Matters, the typical homeowner with a mortgage now has approximately $310,500 in equity. (Keeping Current Matters)
That’s a significant financial resource — especially for homeowners who have been hesitant to move because of today’s affordability challenges.
Your Current Mortgage Rate Isn’t the Whole Story
It’s easy to understand why homeowners with a low mortgage rate may hesitate to sell.
Giving up a 3% or 4% mortgage for a higher rate can feel like taking a financial step backward.
But your mortgage rate is only one part of the equation.
If you’ve built substantial equity, you’re not approaching your next purchase like a first-time buyer starting from zero. The money you receive from selling your current home could dramatically reduce how much you need to finance on your next property.
And that can change the numbers considerably.
What Could Your Equity Help You Do?
Depending on how much equity you’ve accumulated, selling your current home could give you several options.
Make a Larger Down Payment
Using your equity toward your next home could allow you to make a larger down payment.
The more money you put down, the less you need to borrow. That could help reduce your monthly mortgage payment and make today’s interest rates easier to manage.
Buy Your Next Home with Cash
For homeowners who have owned their properties for many years — particularly those planning to downsize — accumulated equity may even make an all-cash purchase possible.
According to National Association of Realtors data cited by Keeping Current Matters, 26% of repeat buyers paid cash for their homes in July. (Keeping Current Matters)
For the right homeowner, that can eliminate mortgage-rate concerns altogether.
Make Your Current Home Work Better
Moving isn’t the only option.
Maybe you love your neighborhood but need another bedroom, an updated kitchen, a home office, or a different floor plan.
Your equity may give you additional financial flexibility to renovate your existing home instead of moving.
The important thing is understanding what resources you actually have before deciding what’s possible.
Don’t Rely Only on an Online Home Estimate
Online home-value estimates can be useful as a starting point, but they don’t always understand what makes your specific property different.
Updates, condition, location within the neighborhood, lot size, views, layout, recent comparable sales, and current buyer demand can all influence your home’s actual market value.
That’s why homeowners considering a move should get a professional assessment based on current local market conditions.
Once you have a better idea of your home’s potential selling price and remaining mortgage balance, you can estimate how much equity you may have available.
Knowing Your Equity Gives You Options
Your equity won’t make higher mortgage rates or home prices disappear.
But it may give you significantly more flexibility than you thought you had.
Instead of asking:
“Can I afford to move in this market?”
The better question may be:
“What could my equity allow me to do next?”
You may discover that you can make a substantial down payment, comfortably downsize, purchase another property with less financing, or make improvements to the home you already own.
Bottom Line
If you haven’t checked your home’s value recently, now may be a good time.
Thinking about selling or simply curious about what your home is worth? Let’s take a look at your current market value and estimated equity so you can understand your options before making your next move.