Good news for homeowners–your property has never been more expensive. Today, most properties have gained an 8-10% equity increase in recent years.

Now what?

While this is good news, not all homeowners know what this means. Moreover, they don’t understand how this market increase can significantly affect their lives. If you’re one of those people, you’ve come to the right place. This blog will talk about equity gains and how you should use them to your advantage.

 

What is equity gain, and how does it happen?

 

Equity gain, also known as capital gain, is an increase in the value of a property and equity compared to the amount you bought or financed. For example, you bought your house at $1,000,000 in 2015, and a realtor said that it’s now valued at $1,500,000–the $500,000 difference is your equity gain.

You don’t have to do anything to get an equity gain in most cases. The market value of your house continues to boost since there is a mismatch in demand and supply when it comes to housing. The demand for housing continuously increases while there’s still a low housing supply.

 

What happens if you acquire equity gain?

 

If you learned about your equity gain, the first thing that you should do is revisit your financing terms. If you have fixed-term financing, you don’t have to worry about anything–you’ll pay the same mortgage regardless of your equity gain.

This is not the case with flexible mortgages. Once your property increases in value, so are your monthly mortgage. This means that getting equity gain can be a disadvantage for you.

 

What should you do if you get equity gain?

 

Getting equity gains gives you the option of upgrading to a larger home. You can sell your home for a bigger one if you’ve always been thinking about this.

Downgrading is good when you get equity gains, too. If you sell your current house and move to a smaller one, you can even get the total money you’ve paid for your home.

 

In short, getting equity gains give homeowners the freedom to consider the possibilities of the real estate market.

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