If you’re looking to sell your home and buy a new one, you may be able to use the equity in your current home to help finance the purchase of your new one. In this video I explain how equity works in real estate and how you can use it to buy a new home.
What is Home Equity?
Home equity is the portion of your home’s value that you own outright. For example, if your home is worth $250,000 and you have paid off $100,000 of your mortgage, then your home equity is $100,000. Home equity can be a great resource when you are buying a new home. Because you already own a portion of your new home outright, you will need to borrow less money from the bank and you will likely qualify for a lower interest rate on your mortgage.
In addition, having home equity can give you some negotiating power with the seller of your new home. If the seller is looking for a quick sale, they may be willing to accept a lower offer if they know that you have the ability to pay cash for the property. As a result, understanding your home equity can be a valuable tool in the process of buying a new home.