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In the third quarter of 2018, Americans experienced the highest value of home equity ever seen at an amount of $15.2 trillion.
If you’re new to homeownership, you may not quite understand the meaning of home equity. Home equity is the number you get when you subtract what you owe on your home from what it is worth at the present time.
Is it time to sell your home? Are you wondering: how much equity should I have in my home before selling?
Stick with us to learn the key things you should know before you list your home for sale.
Answer This: How Much Equity Should I Have in My Home Before Selling?
When selling a house, your goal is to make as much money as possible. Does that mean you should get an answer to the question, “How much equity do I need to sell my house” before calling a realtor?
Do You Have to Have Equity in Order to Sell?
If your home has decreased in value, you may have little to no equity in the home. You can still sell it, but you’ll end up owing money in the sale.
You won’t have any cash left over to put towards the purchase of another home.
What is Instant Equity?
If you’re buying a home in a really hot market, you may enjoy earning instant equity as the value of the home increases right away. Another way to earn instant equity is by buying an under-market property.
Otherwise, it usually takes some time to build equity in a home. If you’re thinking of selling your home, you want to crunch some numbers before putting up the for-sale sign.
Is There a Magic Number?
When selling your home to purchase a larger home, you want to have enough money left over to pay closing costs, a down payment, and pay off the mortgage of the home you sold. Usually, this means about 15% equity to cover these items.
If you are relocating, 10% of equity is sufficient to pay off the mortgage and cover expenses without out-of-pocket costs.
The overall goal is to make enough money to pay off the current mortgage, closing costs, commission, and down payment. If you have enough equity in your home to accomplish that, you’re in good shape.
How Much Equity Do You Have in Your Home?
Before you answer the question, “How much equity should I have in my home before selling?”, you need to find out how much equity you actually have. You can then make an informed decision on whether or not it’s the right time to sell your home.
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