NEW YORK, March 28, 2023 (Newswire.com) - Credello: You may know the term "home equity" if you're a homeowner. This means the unencumbered interest that you own in your real property. In other words, it's how much of the home's total worth you own versus the cost of any liens against it.
Home equity is higher now than it has been in many years. Let's discuss what that means. We'll also talk about a home equity loan for debt consolidation since that might appeal to you.
What Does It Mean When Home Equity Levels Rise?
When home equity levels rise, there's a housing bubble. When a housing bubble occurs, the value of houses across the country skyrockets. Often, this happens when there's a great demand for housing, creating a seller's market.
At the moment, part of why this is happening is because there are lots of business entities that are buying up houses rather than families purchasing them. Many of these entities are rental companies. They're acquiring properties so they can rent them out.
This Creates More Demand
Since more houses are being bought by companies looking to rent them out, fewer ones are available for purchase by individuals and families. Often, the rental companies are outbidding potential homebuyers.
It's unclear whether this trend will continue, but one thing is certain. With record-high home equity levels, you can probably get more for your home if you decide to sell it now than you could have gotten a few years ago.
If you were mulling over selling your home, now might be the ideal time to do it. The bubble will burst eventually, and then you won't get as much money as you can at the moment.
Of course, it only makes sense to sell your home if you plan on getting an apartment or pursuing some other kind of scaled-down living situation. If you plan to sell your house just to buy another one, you'll face the same seller's market that allowed you to unload your property for top dollar. If you do that, you'll blow your whole profit margin.
Home Equity Loans
The other thing worth knowing about this kind of market is that it's a great opportunity to get a home equity loan if you have any interest in one. A home equity loan allows you to leverage the equity ownership you currently have in your property.
You can approach a credit union or bank and ask them for a home equity loan. Because home equity is high right now, you can get considerably more money through one of these loans than you could a few years ago.
If you do that, then you can consolidate your debt. You can pay off any existing financial obligations you have with the money the credit union or bank gives you. Then, you will have just a single loan to pay back, the one you got from the lending entity.
Should You Do This?
The current market should warrant some careful consideration on your part as a homeowner. Now is probably the time to sell if you were planning on downsizing to an apartment. If you're an older adult and you don't like walking up and down the stairs anymore, this move might make sense.
As for individuals or families thinking about using their house's equity to get a home equity loan for debt consolidation, that might make sense. If you do it, you may get a lower interest rate on the loan the credit union or bank gives you than what you currently pay to the credit card companies and other entities you owe.
If you do this, though, proceed cautiously. If you get a home equity loan, the lending entity now has a lien on your property. If you can't pay them back expediently, they might take your house. That only happens in extreme circumstances, but it's always possible.
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Original Source: Home Equity is at Record High Levels Right Now. What You Should Know.
Lifestyle - JISIP NEWS originally published at Lifestyle - JISIP NEWS