Hey there!Thought I'd jump right into my blog and share a few quick thoughts to help you in your search for a home, whether it's your first or your fifth. With all the information out there it
Understanding How Home Equity Works And Why Buying A Home Can Be Your Best Investment
When exploring into the world of real estate and investment property, there are many terms that will come up that require further explanation. Whether you've never heard the phrase 'home equity' before or you have a little familiarity, here are the ins and out of what it means and how this asset can help your financial outlook.
All About Home Equity
Essentially, home equity refers to your portion of the value of your home, and the amount of this figure is important because it is included among your assets when determining your net worth. If this sounds confusing, think of it this way: if you have completely paid off the cost of your home, the value of your home equity is this total amount. Of course, because most people seek a lender to borrow money from when they purchase a home, their home equity would consist of their down payment and whatever amount they've paid down on the mortgage since purchase.
An Example Of Home Equity
To provide further clarification, let's use the example of a house that has been purchased for $300,000. In the case that a down payment of 20% has been provided at the time of purchase, the equity in the home would be $60,000. Since this amount is the percentage and cost of the house that's been paid down, this is the amount of the house that is actually owned and this will be figured among an individual's assets.
How Home Equity Works
As you pay the amount that you owe on your home each month, you are paying off your total debt and thereby increasing your equity. Since this amount of money is considered an asset that belongs to you, it can be used down the road to buy another home or invest in other important things like education or retirement. While paying off the amount owed on a home is a considerable investment, if the value of your home increases, this means that you'll still owe the same on it but your home equity will have automatically increased.
As an asset that is part of your financial net worth and can be used down the road to fund other investments, home equity is a very useful term to know when it comes to purchasing a home. If you're on the market for a home and are considering your options, you may want to contact one of our local real estate professionals for more information.
Ted M. Daigle
About Ted Daigle – Realtor Having the right real estate agent means having an agent who is committed to helping you buy or sell your home with the highest level of expertise in your local market. T....
Latest Blog Posts
There is plenty of real estate terms used in transactions. Needless-to-say it can be confusing for both buyers and sellers trying to navigate the process. The home loan process might feel
For Lafayette real estate watchers on the lookout for the latest trends, here’s some food for thought. According to last week’s Wall Street Journal, it’s one formerly overlooked
Successful pricing strategies in any endeavor must take the competition into account—so when it comes to right-pricing your Lafayette home, that factor is at least as important as any