One of the biggest benefits of buying a home is building home equity. Home equity is the market value of a homeowner’s interest in their real property, or in layman’s words, the difference between a property’s market value and the outstanding balance of all liens on the property. When you buy a home, you increase your home equity with every payment. With every payment towards a house, the property’s value appreciates, making the property more valuable in the case of a refinancing or a complete sale of the home. A house will always be valuable, the amount of value tied to it is dependent on how much of a home’s value you finance and therefore control. Knowing what we know about home equity, how exactly can you increase it? Below, I’ve listed a few options.
Why does home equity matter? Because you can profit from your own investment, it’s easier than you think. Home equity serves as security, much like a good credit score would. Home equity loans allow you to borrow against your home’s value over the amount of any mortgages on the property. You can gain access to larger loans and thus larger pockets of money, by demonstrating your strong financial reliability and responsibility through great home equity. If you want to learn where your home equity stands today, contact your mortgage expert to learn more.