Home prices have seen a significant increase over the past year. At the end of April, the National Association of REALTORS announced that the median existing-home sale price rose by a record-breaking annual rate of 17.2% in March to a historic high of $329,100 and that all regions saw double-digit price gains.
Whether you own a home or are planning to buy one, this news is likely to have an impact on you. Here are the key ways that you may be affected by this historic increase in home values.
Your net worth may have received a boost
Homeownership is a major component of most people’s net worth. If you own a home and its value has increased significantly recently, that likely means your net worth has benefited as well.
You may be able to take more cash out
The difference between your home’s value and your mortgage balance is your home equity. The more equity you have in your home, the more cash you may be able to take out through a cash-out refinance or other home equity program. This may be worthwhile if you need funds for a renovation project, college costs, debt consolidation or any other large expense.
You may be able to cancel mortgage insurance sooner
If you’re paying for mortgage insurance on your loan, the faster you build equity in your home, the sooner you may be able to remove mortgage insurance or refinance into a loan without mortgage insurance. That could mean reducing your monthly mortgage expenses by a nice amount.
Your home may sell for more
Not surprisingly, if your home’s value has increased, it most likely means you can sell your home for a higher price. If you’ve been on the fence about selling, this could be your opportunity to sell your home for a good return.
It may cost more to buy a home
On the other side of the equation, higher home prices naturally mean you may be paying more for your next home purchase. Thankfully, mortgage rates remain near historic lows, helping to keep monthly mortgage payments affordable, and there are still several other benefits to buying a home.
Rising home values bring both opportunities and challenges. If you’d like to learn more about your options for taking cash out, removing mortgage insurance or buying a home, get in touch today for a free consultation.