New Found Equity
The market has handed many homeowners a lot of new equity. Tisha Findlay walks through the million dollar question: do you sell, or do you refinance and stay?
As we all know, the housing market has been set ablaze for quite some time now. For homeowners, this market is the main contributor to the new found equity in your home. This brings to mind the million dollar question.
Do I sell?
It has become increasingly tempting to take advantage of doubling, tripling, or even quadrupling your initial investment. This current market can be highly profitable for someone liquidating assets without the intention to repurchase. For example, a landlord who does not want to be a landlord anymore, or a transition to a retirement home.
If you are selling to upsize, you have to weigh out the pros and cons. Yes, you may make money on the house you are selling, but you are also putting yourself in a position to spend a great deal more. This is mainly due to lack of inventory, which results in bidding wars and drives up the cost. Clearly a cycle that is hard to break.
Or do I stay and use the equity?
If you decide not to sell, refinancing is a great way to take advantage of the increased values. There are unlimited options as to what you will be able to do with the new found equity in your home. Maybe you were hoping to move to have more space. Why not add to what you already have? Perhaps it is time for a new kitchen or a backyard oasis.
It is undoubtedly important to look at all scenarios before deciding what makes the most sense for you. Fortunately, you are in the driver's seat because you already own a home. First-time buyers, on the other hand, do not have that luxury. They are learning to have an insurmountable amount of patience. That is definitely an article for another time.
Originally published Mar 27, 2021. Rates, programs and rules mentioned reflect that time; for today's numbers see the rates page or ask Tisha.
