Quite simply, equity is the portion of your property that you own. To get a rough estimate of your equity, take your home’s value (what you can sell for in the current market) and subtract the amount you owe (your loan balance or any other liens). The resulting amount is your equity.
Can my Equity Work for Me?
Having equity feels good. Just like paying off your car, student loans, or credit cards, it feels good to lower your home’s debt. The difference with home equity is you can use it for other goals.
Many financial experts would advise against using your home equity like a credit card, meaning using it to purchase something that depreciates like vehicles or vacations. Most financial experts would agree that using your equity to buy other investments can be a good bet.
You may love the house you live in and want to grow your retirement portfolio or hedge against inflation. Could using your home’s equity to purchase investment property be a good move for you?
You may be living in the first home you ever bought and realize you’ve outgrown it. Can you sell that house and use your equity as a down payment on your next home?
You can keep your current house, turn it into your first rental, then use your home’s equity to buy your next home. Depending on how long it’s been since you bought a house, you may qualify for a first-time, low-down loan (as little as 3.5%)…even when this is not the first house you’ve purchased.
You can sell your current home, then use a hybrid approach. Use part of the equity as a down payment on your next home and part of the equity to purchase an investment property.
You can sell your current home and move into your forever home. This could be a larger or smaller home depending on what stage of life you are in. It may allow you to purchase a second, vacation, or retirement home depending on the amount of equity you’re holding.
With today’s (still) historically low interest rates, you may even be able to keep your housing costs close to or lower than your current mortgage payment. Sometimes it works like that and we can help you crunch the numbers.
Can I Increase my Equity?
While you don’t have complete control over your home equity amount at any given time, you can take steps to build equity.
Buy a home in an up-and-coming neighborhood. When the area around your home is improving, your home’s value will most likely increase too. If you’re interested in knowing which Chicagoland communities are in growth-mode, ask.
Make a larger down payment when you purchase. This keeps your initial mortgage amount low.
Negotiate a competitive sales price. Knowing what is competitive involves science (looking at comparable sales) and art (negotiations). We use both to help our clients get the best price when they buy and when they sell.
Pay your mortgage down faster than expected. By adding a little bit to your mortgage payment each month, applied to your principal balance, you can pay down your mortgage ahead of schedule. Ask us about amortization and we’ll work the numbers with you.
Remodel or renovate. Small improvements can add value to your house. It’s important to know which features will make a difference when you sell and which ones do not. We can coach you on what would be great for your home.
Use your current equity to invest in real estate. By adding to your real estate holdings, you will have more than one asset building equity.
As you can see by the chart above, the median price of homes in Chicagoland shows a pattern of stability…even with all the challenges over the last 12 months. We are seeing activity both in and around the downtown area. Some people have discovered they can move to the suburbs and enjoy that lifestyle because of remote work opportunities. Others are seeing new opportunity in the city center. It all depends on the lifestyle and location YOU want. Either way…we can help!
4511 Kirchoff Rd, Rolling Meadows, IL 60008
Attention Developers/Investors, don’t miss your chance! Residential vacant land with great investment opportunity. Wooded lot! Build your dream home on this 198′ X 295′ timbered lot. Over 300′ deep with the frontage at over 500′. $250,000
Our Team has 20 homes under contract. Here are a few we have put under contract in the past few weeks. If you are curious about buying or selling a house, let us show you the path!
Are you looking for a Chicago Condo? There are over 4500 listed as of this date.
Click the link below to see what’s available then, give us a call when you see something interesting.
We can set up a tour OR look at others
The Wexler Group at Keller Williams Preferred Realty is thrilled about working with NAWS Humane Society of Illinois to accomplish our mission of helping to rescue one pet for every home we sell. We are Realtors who rescue dogs and cats from unjust situations and could not think of a better company to team up with.
NAWS rescues dogs and cats from high-kill facilities that are likely to be put down. This means they take in very young puppies and kittens, terminally ill and senior pets, and other animals in difficult situations such as heartworm positive dogs. NAWS aims to end pet homelessness and unnecessary pet euthanasia, focusing specifically on providing low cost spay and neuter services to prevent litters that would not get the proper care they deserve..
The Wexler Group is very passionate about this organization, along with all the other great charities we work with. Every person that buys or sells a home with The Wexler Group will have the option, at our expense, to welcome a rescue dog to their home or we’ll make a donation to NAWS in your name. If you would like more information about NAWS or the work we do for our community, please feel free to contact our team at any time!