Your Home Equity Can Offset Affordability Challenges
Are you thinking about selling your house? If so, today’s mortgage rates may be making you wonder if that’s the right decision. But your equity can help with some of those affordability concerns. Some homeowners are reluctant to sell and take on a higher mortgage rate on their next home. If you’re worried about this too, know that even though rates are high right now, so is home equity. Here’s what you need to know. Bankrate explains exactly what equity is and how it grows: . Recently, your equity has been growing faster than you might think. That’s because, over the past few years, home prices went up significantly – and those rising prices helped your equity to accumulate faster than usual. While the market has started to normalize, there are still more people wanting to buy homes than there are homes available for sale. This high demand is causing home prices to go up again. “Home equity is the portion of your home that you’ve paid off and own outright. It’s the difference between what the home is worth and how much is still owed on your mortgage. As your home’s value increases over the long term and you pay down the principal on the mortgage, your equity stake grows.” In other words, equity is how much your home is worth now, minus what you still owe on your home loan
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