What is Home Equity?

Home equity is the difference between your home’s current market value and the amount you owe on your mortgage. In simple terms, it’s the portion of your home that you truly own.

High Equity:

High equity means you owe much less on your mortgage than your home is worth. This is great news for sellers because you can expect a substantial profit from the sale.

Example:

• Market Value: $400,000
• Mortgage Balance: $100,000
• Equity: $300,000

Low Equity:

Low equity means you don’t have much of a gap between your home’s value and your mortgage balance. Selling in this situation might still be profitable, but the gains will be modest.

Example:

• Market Value: $400,000
• Mortgage Balance: $350,000
• Equity: $50,000

Negative Equity:

Negative equity, also known as being "underwater," means you owe more on your mortgage than your home is worth. This can be challenging, but there are options available to help you navigate this situation.

Example:

• Market Value: $400,000
• Mortgage Balance: $450,000
• Equity: -$50,000

Why is Home Equity Important?

Home equity can be a powerful tool for homeowners. Whether you’re looking to sell, refinance, or take out a home equity loan, understanding your equity position is crucial.

Factors That Impact Equity:

• Closing Costs: These can reduce the total proceeds from the sale, impacting your net equity.
• Arrears: Any overdue mortgage payments can decrease your equity.
• Property Taxes: Outstanding property taxes must be settled before the sale, affecting your final equity.

How We Can Help:

Are you ready to sell your home in Northwest Arkansas? Our expert team can help you assess your home’s value, understand your equity position, and strategize the best way to maximize your profits. Stay up to date on Northwest Arkansas market trends and get your home's value online. Contact us today to learn more and take the first step toward a successful sale!