Are you curious about how much equity you have in your house and what options you have? With the real estate market the way it has been for the last year, it may be a good time for you to consider selling or refinancing. Knowing your home’s worth will help you know what additional options you have. Read along below as I break down the benefits of both options.

Let’s start from the beginning because before I got into real estate, I was not sure what equity was or how to create it.

So, What is Equity?

Your home’s equity is the difference between your home is worth and how much you owe on your mortgage. So if you own your home “free and clear,” you have 100% equity. If you just purchased your home with a low downpayment option, FHA or Conventional, you probably have around 3% equity.

How to Increase Equity?

Equity can increase in 2 ways. 1. As you make mortgage payments, a portion goes to your principal, paying down your mortgage. Note, this is not your entire payment; a second portion goes to interest payments. Your statement should tell you the amount. 2. Your home’s value increases or appreciation.

Let’s talk Refinancing

• Reasons to Refinance Your Home
• Lower Your Interest Rate
• Eliminate Mortgage Insurance
• Get Cash Out
• Pay off Debt or Renovate your home

How Does a Refinance Work?

When you refinance your mortgage, you are taking out a new loan to pay off your original mortgage, and there are two ways you can use them. First, a cash-out refinance, which is when you pull the equity. This equity has increased from one or both of the examples above. Second, a rate and term refinance gives you better terms to meet your goals. Read below for some examples.

Refinancing allows you to borrow against the equity you have built up in your home and take out the cash you can use to pay off other debt, make home improvements, or invest in your retirement. For example, let’s say you have $70,000 of equity in your home but still owe $175,000 on your mortgage. You may take out a new mortgage for $200,000 that is used to pay off the first mortgage and then pays you $25,000 in cash. If you have made regular payments on your initial mortgage for at least five years, you probably have enough equity built up to take a cash-out mortgage.

Examples

Another reason to refinance is to reduce your monthly payment to give you more flexibility in your monthly budget. When you refinance, you are basically starting over on your 30-year commitment, but your new mortgage amount will be lower if you are not taking cash out, so your payments will decrease.

If you initially took out a 15-year mortgage, changing to a 30-year term will lower your monthly payment considerably.   You may also choose the opposite and switch from a 30-year loan to a 15-year term. Your monthly payments will likely increase, but you will pay your loan off earlier and pay less interest.

Another reason people refinance is to change from an adjustable-rate mortgage (ARM) to a fixed rate, which eliminates fluctuations in your monthly mortgage payment and may help you take advantage of favorable rates.

Are you considering listing your home?

4 Reasons to List Your Home

• Its time to Resize (Downsize or Upsize)
• Low Inventory in our Area means you can get Top-Dollar!
• You are Relocating
• You are Ready to Start a New Chapter

How does Listing your home work?

If you would like a free download I have put together on this process, please follow this link.

Free Download on Preparing your home to sell!

Let’s break down some of the key points below.

If you answered yes or maybe to any of these reasons, let’s dive into what selling your house looks like. First, you and I will discuss your timeline and goals. This is key when you sell your home; we will need to coordinate your next steps and move to remove as much stress as we can. At this point, we will also value your home this time and set up a plan.

Next, it’s time to get your home show- and sell-ready. There are a few things you can do to put buyers at ease the minute they walk in the front door—which is exactly what you want to do. ⁣⁠If you do not have time or budget to do the entire house, focus on the entryway and living room. Consider a statement chandelier, a cozy entryway, or a pop of color on the front door.⁣⁠ Clarify each room’s purpose by dividing large rooms into smaller seating areas. Use furniture and household items on hand and give each space a purpose (office, craft room, guest bedroom, etc.).⁣⁠ Consider the scale, texture, and tone of each room. Everything should “fit” and be visually appealing. Get rid of any unnecessary furniture that’s cluttering up the space.⁣⁠ Give attention to your great outdoors. Curb appeal — it’s a thing. Buyers will love seeing new landscaping, clean walkways, and bright lighting.⁣⁠

The Process

Familiarize yourself with the process. Each step is shown in detail inside of the download.

1. Agree to Sell and set a Plan
2. Prepare Home for Pictures and Showings
3. Once Pictures of taken, move to Active Statuseon the MLS
4. Configure showings, and Negotiate with Offers
5. Accept an offer, and you are Under Contract!
6. Open home for inspection and appraisal
   • This step may create items that need additional negotiation or to be corrected.
7. Closing!

Are you curious to learn your options? Let’s schedule a one-on-one call and discuss your financial goals. We will discuss your short and long-term financial goals, check your credit score, discuss interest rate, and cover the costs involved in refinancing.

Schedule a Call