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For Sellers

Are You Contemplating Selling Your Home? Here’s How Your Equity Can Help

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Selling your home might be on your mind, but the current mortgage rates may be giving you pause. Many homeowners are hesitant to sell and potentially take on a higher mortgage rate for their next home. If this dilemma has you concerned, it’s important to understand that while interest rates are currently elevated, so is your home equity. Here’s what you need to know.

What Exactly Is Home Equity and How Does It Grow?

Home equity is the share of your home that you’ve paid off and fully own. It’s the difference between your home’s current market value and the remaining balance on your mortgage. As your home appreciates in value over time and you make mortgage payments that reduce the principal amount owed, your equity stake steadily increases.

In simpler terms, equity is essentially how much your home is worth now, minus the outstanding mortgage balance.

How Much Equity Do Homeowners Currently Possess?

Surprisingly, homeowners have been accumulating equity at a faster pace than they might realize. To put things into perspective, CoreLogic reports that the typical U.S. homeowner now boasts approximately $290,000 in equity. This significant growth can be attributed to the substantial increase in home prices over the past few years. Although the market is showing signs of stabilization, demand for homes still outpaces supply, which is contributing to another round of price hikes.

According to data from the Federal Housing Finance Agency (FHFA), the Census, and property data provider ATTOM, nearly 68.7% of homeowners either have fully paid off their mortgages or have achieved at least 50% equity in their homes.

How Your Equity Can Alleviate Affordability Concerns

Given the current challenges related to affordability, your equity can play a pivotal role when you’re contemplating a move. After selling your current residence, you can leverage the equity you’ve accumulated to facilitate the purchase of your next home. Here’s how it can work to your advantage:

1. Become an All-Cash Buyer: If you’ve been in your current home for an extended period, you may have accumulated enough equity to purchase a new house without the need for a loan. In such a scenario, you can sidestep borrowing money and the associated concerns about fluctuating mortgage rates. The National Association of Realtors (NAR) highlights that these all-cash buyers are happily avoiding the challenges posed by higher mortgage interest rates.

2. Increase Your Down Payment: Your equity can be employed as a substantial down payment on your next home. It could even be substantial enough to allow you to make a larger down payment, reducing the amount you need to borrow and potentially mitigating concerns about today’s interest rates. According to Experian, a larger down payment can lower your principal loan amount and, consequently, your loan-to-value ratio, which may result in more favorable interest rate offers from lenders.

In Conclusion

When considering a move, the equity you’ve accrued can be a game-changer, particularly in the current housing market landscape. To determine the exact amount of equity you have in your current home and explore how it can be used to facilitate your next home purchase, it’s advisable to reach out to a trusted real estate agent.

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For Sellers

Should You Sell Your House or Rent It Out?

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When you’re ready to move, figuring out what to do with your house is a big decision. And today, more homeowners are considering renting their home instead of selling it.

Recent data from Zillow shows about two-thirds (66%) of sellers thought about renting their home before listing, with nearly a third (28%) taking that possibility seriously. Compared to 2021, when fewer than half (47%) of homeowners considered renting before selling, it’s clear this trend is on the rise.

So, should you sell your house and use the money toward your next home or keep it as a rental to build long-term wealth? Let’s walk through some important questions to help you determine the right path for your financial and lifestyle goals.   

Is Your House a Good Fit for Renting?

Before you decide what to do, it’s important to think about if it would make a good rental in the first place. For instance, if you’re moving far away, managing ongoing maintenance could become a major hassle. Other factors to consider are if your neighborhood is ideal for rentals and if your house needs significant repairs before it’s ready for tenants.

If any of these situations sound familiar, selling might be a more practical choice.

Are You Ready for the Realities of Being a Landlord?

Managing a rental property involves more than collecting monthly rent. It’s a commitment that can be time-consuming and challenging.

For example, you may get maintenance calls at all hours of the day or discover damage that needs to be repaired before a new tenant moves in. There’s also the risk of tenants missing payments or breaking their lease, which can add unexpected stress and financial strain. As Redfin notes:

“Landlords have to fix things like broken pipes, defunct HVAC systems, and structural damage, among other essential repairs. If you don’t have a few thousand dollars on hand to take care of these repairs, you could end up in a bind.”

Do You Understand the Costs?

If you’re considering renting primarily for passive income, remember, there are additional costs you should anticipate. As an article from Bankrate explains:

Mortgage and Property Taxes: You still need to pay these expenses, even if the rent doesn’t cover all of it.

Insurance: Landlord insurance typically costs about 25% more than regular home insurance, and it’s necessary to cover damages and injuries.

Maintenance and Repairs: Plan to spend at least 1% of the home’s value annually, more if the house is older.

Finding a Tenant: This involves advertising costs and potentially paying for background checks.

Vacancies: If the property sits empty between tenants, you’ll lose rental income and have to cover the cost of the mortgage until you find a new tenant.

Management and HOA Fees: A property manager can ease the burden, but typically charges about 10% of the rent. HOA fees are an additional cost too, if applicable.

Bottom Line

To sum it all up, selling or renting out your home is a personal decision. Make sure to weigh the pros and cons carefully and consult with professionals so you feel supported and informed as you make your decision. A real estate agent can be a great person to go to for advice.

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For Sellers

What’s Motivating Homeowners To Move Right Now

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Over the past few years, some homeowners have decided to delay their move because they don’t want to sell and take on a higher mortgage rate on their next home. Maybe you’re thinking the same thing. And honestly, that’s no surprise. It’s a very common roadblock and is one of the biggest factors that’s kept the number of homes on the market so low for so long.

But a growing number of homeowners are deciding they just can’t wait any longer. Often, it’s because of personal or lifestyle change. As Redfin explains:

“Some homeowners are opting to bite the bullet and give up their low rate in order to move. Many are selling because a major life event like a job change, or divorce . . .”

If you’re weighing the decision to move, take a look at some of the top reasons others are choosing to sell. You might find those are reason enough for you to move now, too.

It’s Time for a Change

A new job in a different city, a desire to be closer to family, or simply wanting a change of scenery can all spark the need to sell.

Let’s say you’ve landed a great job offer that requires relocating, listing your current home quickly may be the next logical step.

There’s Just Not Enough Space in Your Current House

Sometimes, your current home just doesn’t fit your lifestyle anymore. A growing family, the need for a home office, or more room for entertaining can all drive the decision to upgrade to a larger space.

As an example, if you live in a condo and have a baby on the way, selling might be the next best move so you can find a larger home that suits your needs.

Retirement or Wanting To Downsize

On the flip side, some homeowners are ready to downsize. This could be due to children moving out, retirement, or simply wanting less to maintain.

If you’re newly retired and dreaming of a simpler lifestyle, downsizing to a smaller home could free up both time and resources to enjoy this new chapter of life.

Changes in Relationship Status

Big changes like divorce, separation, or marriage often lead to a need for new living arrangements.

If you just went through a divorce, selling the house you once shared may allow both of you to move forward and find a living situation that works better for you now.

Health and Mobility Needs

Health concerns, especially those that affect mobility, can also drive the decision to sell. A home that once worked well might no longer suit your needs.

If this sounds like your experience right now, selling your current home to move into a more accessible space, or even using the proceeds for assisted living, could significantly improve your quality of life.

Bottom Line

Selling your home isn’t just about market conditions or mortgage rates—it’s also about making the best decision for your lifestyle and future. As Bankrate says:

“Deciding whether it’s the right time to sell your home is a very personal choice. There are numerous important questions to consider, both financial and lifestyle-based . . . Your future plans and goals should be a significant part of the equation.”

 

If a major life change has you thinking about moving, now might still be the right time to sell. Work with a trusted real estate professional to help you navigate the process.

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For Sellers

Why You Need an Agent To Set the Right Asking Price

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a diagram of a price drop

Some Highlights

  • The #1 task sellers struggle with is setting the right asking price for their house.
  • Without an agent’s help, you may set a price that turns away buyers and takes a long time to sell. 
  • To make sure your house is priced right, connect with a local agent. Because if the price isn’t compelling, it’s not selling. 

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The information contained, and the opinions expressed, in these article are not intended to be construed as investment advice. Let's Talk Real Estate and Keeping Current Matters, Inc. do not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Let's Talk Real Estate and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.