Home Equity; Do You Have Unknown Wealth?

Home Equity; Do You Have Unknown Wealth?

I recently met with clients whom I helped when they purchased their first home, not even 3 years ago. They are wanting to move-up into a nicer home, but didn’t know how much their current home is worth. My market analysis determined that their home is worth 26% more than they paid for it, so they will have a nice down-payment on their next home.

EXIT Realty North Star Agent with ClientsI love it when I get to deliver great news like that. It doesn’t happen all the time, but it is happening more and more lately. These particular clients purchased their home as prices had begun to rise, so they caught the wave, but even my clients who purchased their home with a mortgage at the peak of the bubble in 2007-2008 are finding out that they are in a positive equity situation.

Fannie Mae recently did a study that indicates many homeowners are not aware that they have regained equity in their homes. It showed that 23% of Americans still believe their home is in a negative equity position. But Corelogic recently reported that only 4.9% of homes are in a negative position. They also said that only 37% of Americans believe they have “significant equity” (greater than 20%) when the actual number is 83%!

What does this mean for you? If you have at least 20% equity, your mortgage company can drop the PMI (Private Mortgage Insurance) from your current mortgage which will reduce your monthly payment. You may have a larger down-payment to put towards your next home that you think you do. You may also qualify for a larger mortgage on your next home.

This also means good things for the US economy. Frank Nothaft, Corelogic’s Chief Economist, said, “Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years.”

If you are like the typical American homeowner who is unsure of how much equity you have built in your home, let’s get together and evaluate your current situation.

Jon Niemeyer is the Broker/Owner of EXIT Realty North Star, 1039 Sunset Dr Norwalk, IA 50211. We provide full service real estate services to the Des Moines, Iowa metro area. Learn more about Jon at JonNiemeyer.com.

Pointing People in Positive Directions

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