Homeowners have more equity than ever before with levels reaching an all-time high! The U.S. Census has even reported that 38% of owner-occupied homes are owned free and clear, which shows these individuals do not have a mortgage. Even homeowners with a mortgage are seeing their equity increase as well! With the real estate values increasing, homeowners are receiving a dollar-for-dollar gain in the equity of their home.
In the first quarter, the 2021 U.S. Home Equity Report from ATTOM Data Solutions has reported:
“17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.”
The equity rich properties represented 31.9% of the 55.8 million mortgaged homes in the U.S. The percentage of equity rich properties has been increasing since last year! The surge in equity has allowed homeowners to use the equity to refinance their home or even move to a new home. Let’s take a closer look at these two alternatives that homeowners now have the opportunity to to use.
Refinance:
With homeowners having a combination of growing amounts of equity and record-low mortgage payments, refinancing is becoming a very convenient option. Homeowners will sometimes choose to refinance so they can lower their current payments or convert some of their equity to cash while their monthly payments remain the same. With mortgage rates staying constant at around 3%, any homeowners with a rate over this amount would benefit from refinancing. By refinancing homeowners have the option to lower their payments each month or to even cash out a portion of their equity while keeping monthly payments the same.
Moving Into A New Home:
With all of the changes we endured in our lifestyles through the trying times of the last year, households were forced to redefine what is needed in a dream home. Homeowners who had higher mortgage rates had the option to cash in their equity and then use that money towards a down payment on their next home. This is a great alternative because it grants homeowners the opportunity to move into a new home without significantly increasing their mortgage payments each month.
An example of household equity is given by the National Association of Realtors (NAR):
“A typical single-family home has grown in value by approximately $150,000 over the last fifteen years. That means the median home price in 2006 being $216,000 would be worth about $366,000 today.”
Bottom Line:
Whether you are refinancing or just moving into a new home, your equity will play an important role in the process. Home equity will give you the opportunity to refinance or move into a home that will better fit your needs. You could potentially use your equity gained to make a down payment on your future dream home. Interested in learning more about your equity gained? Start by finding out your interest rate and then reach out to a trusted Seven Gables Advisor to learn about the opportunities you have available!
