Should I Sell My Home to Access Equity?

Brid Mortamais June 17, 2023

Selling your home to access equity is certainly a safer option compared to taking on additional debt through a loan or line of credit. When you sell your home, you receive the proceeds from the sale, which include the equity you have built up over time.

Here are some advantages of selling your home to access equity:

Debt-Free: Selling your home allows you to access your equity without taking on any new debt. You receive the funds from the sale, and you're not obligated to repay any loans or lines of credit.
Simplicity: Selling your home is a straightforward process. Once the sale is complete, you receive a lump sum of money, and you can use it as you wish. There's no ongoing repayment or interest to worry about.
Flexibility: Selling your home provides you with complete flexibility in how you use the equity. You can use the funds for any purpose, whether it's purchasing a new home, investing, paying off other debts, or fulfilling personal goals.
Risk Mitigation: By selling your home, you eliminate the risk associated with using your property as collateral. If you're unable to repay a home equity loan or HELOC, for example, you could face foreclosure and lose your home. Selling your home eliminates this risk entirely.

However, it's important to consider the potential downsides of selling your home to access equity:

Relocation: Selling your home means you'll need to find alternative housing, which can involve additional costs and potential inconveniences. Consider the implications of moving, such as finding a new home in a desirable location, adjusting to a new neighborhood, and potentially uprooting your life.
Market Conditions: The real estate market is subject to fluctuations, and the value of your home may not always align with your expectations. Selling at the right time can maximize your equity, but there's always the possibility of selling in a down market and receiving less than anticipated.
Transaction Costs: Selling a home involves expenses such as real estate agent commissions, closing costs, and potential capital gains taxes. These costs can eat into your equity, reducing the net amount you receive.

Ultimately, the decision to sell your home to access equity depends on your specific circumstances, financial goals, and personal preferences. It's advisable to consult with a real estate professional and financial advisor to evaluate the potential outcomes and explore alternative options that may suit your needs.