Harness the Power of Home Equity for a Secure Financial Future
What is Home Equity? Home equity is the difference between what your home is worth and the amount you owe on your mortgage. For example, if your home would currently sell for $450,000 and the balance of your mortgage is $200,000, your have $250,000 in home equity.
The equity in your home is a non-liquid asset. It’s your money, but rather than sitting in the bank, it’s providing you with a home. When you factor in the potential of appreciation, an investment in real estate will likely offer a better return than any savings account available.
Home Equity Builds Wealth
When you make a mortgage payment each month, a portion goes towards interest on your loan and the remainder goes towards paying off your principal (loan balance). This means the amount of money you owe the bank is reduced every month – a “forced savings.” As the loan balance goes down, home equity goes up.
When you pay off your car loan and own it outright, when you try to sell it the car is worth much less than when you bought it. But when you purchase a home, the value typically rises. When you sell the house, you have grown your equity, plus the home’s market value will be higher than what you originally paid. That’s the wealth-building power of real estate.
Two Ways to Increase Equity
Add or double your payment each month. Before doing so, check with your mortgage company to be sure the additional payment will be applied to your loan principal.
Increase your home’s market value. Upgrades and additional square footage increase your home value. Check https://www.remodeling.hw.net/cost-vs-value/2019/.
We are Here to Help
Experience Matters. We can help you with selling or re-financing your home. For more information, contact Penny at (206) 618-5123 or email me at Penny@TheOriginalPenny.com.
Serving: Bainbridge Island, Poulsbo, Silverdale, Kingston, Bremerton, Port Orchard, Port Ludlow and Ocean Shores.