If you’re thinking about selling your home and buying another one, there’s one number you may want to look at before you make any decisions: your home equity.
Many homeowners hesitate to move because they’re concerned about today’s mortgage rates, the cost of buying another home, or whether selling makes financial sense.
But there’s a part of the equation that’s easy to overlook — how much wealth you’ve built in your current home.
What Is Home Equity?
Home equity is the difference between your home’s current market value and the amount you still owe on your mortgage.
For example, if your home is worth $750,000 and you owe $350,000 on your mortgage, you may have approximately $400,000 in equity.
That equity can become an important part of your next move.
And if you’ve owned your home for many years, you may have significantly more equity than you realize.
Your Equity May Have Grown in Two Ways
Homeowners typically build equity through two main sources:
1. Paying down the mortgage
Every time you make a mortgage payment, a portion goes toward reducing your loan balance. Over time, that increases the amount of the home you actually own.
2. Home appreciation
As property values increase, your home may become worth more than when you originally purchased it.
When you combine mortgage paydown with appreciation, your equity can grow substantially over the years.
According to Realtor.com research referenced by Keeping Current Matters, nearly 45% of homeowners have lived in their homes for more than 15 years, while about one in four have been in their homes for more than 25 years.
If you’ve owned your home for that long, it’s worth taking a closer look at what your property may be worth today.
Your Equity Could Help Fund Your Next Move
One of the biggest questions homeowners have is:
“If I sell, how much money will I actually walk away with?”
The answer depends on several factors, including your home’s current market value, mortgage balance, closing costs, taxes, commissions, and any other expenses associated with the sale.
But knowing your estimated equity gives you a much clearer starting point.
For example, if your home could sell for $800,000 and you owe $300,000 on your mortgage, you could have approximately $500,000 in gross equity before selling expenses.
That doesn’t necessarily mean you’ll have $500,000 available after closing — but it does show why understanding your equity can completely change the conversation about your next move.
“But I Have a Low Mortgage Rate…”
This is one of the biggest reasons homeowners are hesitant to sell today.
If you purchased or refinanced your home when mortgage rates were significantly lower, you may be reluctant to give up that rate.
That concern is understandable.
However, your mortgage rate is only one part of the financial picture.
You also need to consider:
- How much your home has appreciated
- How much principal you’ve paid down
- How much equity you’ve accumulated
- What your current home is worth
- What your next home would cost
- How much cash you’ll have available after selling
- Your overall financial goals
Sometimes, the amount of equity you’ve built can make a move much more feasible than you initially expected.
The Question Isn’t Just “What Will My New Mortgage Be?”
Instead of focusing solely on the interest rate of your next mortgage, consider looking at the entire financial picture.
Selling your current home could potentially allow you to use your equity toward:
- The down payment on your next home
- Closing costs
- Paying down the new mortgage
- Moving expenses
- Necessary improvements to the new property
- Other financial goals
Your equity could give you options that you may not have considered.
What Is Your Home Really Worth Today?
This is where a professional home valuation can make a big difference.
Online estimates can give you a general idea, but they don’t account for everything that can affect your home’s value.
Your home’s location, condition, updates, lot size, layout, recent comparable sales, and current competition can all influence what buyers may actually be willing to pay.
A local real estate professional can help you determine a realistic market value and estimate what your potential net proceeds could look like.
Before You Decide Whether to Move, Know Your Number
You don’t have to commit to selling just because you want to understand your options.
The first step can simply be finding out:
What is my home worth, and how much equity have I built?
That one number could change how you think about your next move.
You may discover that moving is more achievable than you thought.
Or you may decide that staying put is still the best option.
Either way, having accurate information puts you in a much stronger position to make the right decision for your family and your finances.
Thinking About Selling in Westchester County?
If you’re a homeowner in Westchester County considering a move, I can help you understand what your home may be worth in today’s market and what your potential proceeds could look like after the costs of selling.
Before you make a decision, let’s look at the numbers together.
A better understanding of your home’s value and your equity can help you make your next move with greater confidence — and less stress.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice.
