Understanding How Home Equity Works And Why Buying A Home Can Be Your Best Investment

Dated: May 1 2018

Views: 361


Home Equity Listing with ted

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.

==============================

Buying? ➡️ bit.ly/3bsanGy

FREE Home Evaluation ➡️ bit.ly/3eEQWvQ

==============================

Ted M. Daigle eXp Realty

Ph. 337-243-6108

ted.daigle@exprealty.com

1720 Kaliste Saloom Rd Suite B-2

Lafayette, Louisiana 70508

Ted M. Daigle | Realtor

995694847

www.337homesearch.com

==============================

 

www.listingwithted.com

Blog author image

Ted Daigle

About Ted Daigle – Realtor Growing up in Church Point, LA instilled values of hard work and dedication, which has carried over into every aspect of his life, including real estate. This Lafayette r....

Latest Blog Posts

How to Not Regret the Paint Color You Choose for Your Home

How to Not Regret the Paint Color You ChooseThe secret? It’s all about the lighting. Here’s how to get it right. ReadVisit houselogic.com for more articles like this.© Copyright

Read More

How to Pick your Lender for your First Home or Refinancing

How to Pick your Lender for your First Home or RefinancingYour lender is one person that can make or break you with finances towards your home.  Before you become involved with anyone that will

Read More

Finding The Right Local Realtor In Lafayette

Finding The Right Local Realtor In LafayetteIf you know your situation, have an idea of what you want for a home, and know what you need, you don't want to be the only one that knows.  Finding

Read More

AVOID THESE HOME BUYER TURN OFFS AND SELL YOUR HOME FASTER

Avoid These Home Buyer Turnoffs and Sell Your Home faster You know you should avoid garish paint colors and weird additions if you’re trying to sell a house. However, did you know

Read More