Dumb Question, I know but, If an owner is selling there home, how do they get the equity from it?

Question

I don't know too much about equity. I know what it is, but I don't know what happens with it. Is this cash in the owner's pocket or is it just used for their a new home purchase. Why do people have Home Equity loans?

Answer 1

It's easy, the equity is the value of the home that you have already paid for. It the house sells for $200,000 and you owe $100,00 (doesn't matter if you only paid $105,000 for it!) then you would get $100,000 at closing minus the real estate commissions, taxes, and any closing costs you may have agreed to pay for the seller. The only way you can get out the equity is to either sell the home or get a "Home Equity" loan on the value of the equity. People get home equity loans for a variety of reasons....to buy a car then the interest is deductible on their taxes, to do a home project, to get the cash out of the property to invest.

Answer 2

Home owners get the equity when they sell in the form of a check. The house sells for more than they owe on it, and the equity (the difference between what is owed and what it sold for) goes to the seller.

People get HELOCs for all sorts of reasons. Dumb reasons are to pay off their credit card debt or buy a toy. Good reasons are to make improvements to the house that make it more valuable.

Answer 3

Equity is the difference between the amount(s) owed on the property and its fair market or sale value. If someone has a mortgage for $100,000 and sells the house for $250,000, they have equity of $150,000.

Home equity loans allow you to borrow against this 'equity' for other uses.

Answer 4

You do not appreciate how the housing marketplace works. They purchased at x, and now a couple of years later wish to promote at x+y. Is it valued at it? Depends on whether or not any person wishes to BUY at that rate. Houses do not fairly have an intrinsic significance, they (like so much matters) are valued at what any one wishes to pay for them. So in the event that they promote, great, then their rate was once correct. If they do not promote, then they both decrease the rate till they do, or they maintain directly to the apartment. As a poster above famous, they have got the apartment, you do not. Maybe they may be able to have the funds for to attend. It all depends upon the men and women promoting and shopping. If the dealers are k with sitting there till they get their rate, they typically will sooner or later. If they're in additional of a rush, they will have got to consider approximately shedding. Meanwhile you simply hold watching till you uncover whatever you prefer at a rate you consider is reasonable. If you're content material to attend, you could finally get what you wish. That's now not unique as traditionally housing has risen, now not dropped through the years, and also you could uncover your self falling additional at the back of the marketplace. On the opposite hand, when you have got to purchase, you can have got to consider approximately adjusting what you consider is fair, to compare the marketplace. Think of it as a recreation of fowl, whoever blinks first loses.