What is Equity?
Equity is the value you own in property, such as a house, condo, town-home or duplex. It’s a difference what’s owed and what property is worth in the current market. Say you have a house it’s currently worth $300,000 today and you owe the bank $200,000, your equity would be $100,000. If your house is valued at $500,000 in five years and you still owe $150,000 to your bank, your equity would be $350,000. Equity grows if the property value goes up over time or the amount owed goes down as you make your mortgage payments. Equity in a home can be used as a collateral for a loan, but house is not your piggy bank. Home equity can be a key financial asset over time, so treat it wisely.
Many first time home buyer’s are required to put money down when they purchase a home. For example, if you buy a home using FHA loan you can put little as 3.5% down, this down payment amount now can be you equity in a home when you move in. Some people likes to avoid paying the mortgage insurance on their loan and put down 20% on conventional loan. Say you bought a home for $100,000 and put 20% down, which will be $20,000 down payment at close of escrow, this $20,000 would be your equity in the home when you move in.
There are many ways to boost your home equity over time, making your mortgage payments on time can lower you balance and help built your equity, doing renovations, adding pool, updating kitchen and bathroom with modern looks can also help boost equity. Also, supply and demand plays a key role in equity increase, like in today’s real estate market it’s consider as a sellers market, which means there are more buyers looking or sellers to sell.
If you’re interested in selling your Lake Elsinore, CA or surrounding home and want to know what’s your home is worth in today’s real estate markte Click Here