Providing families with a place that is their own is an avenue to build wealth over time. This “wealth” is built, through the creation of equity. Equity is the difference between how much your home is worth and how much you owe on your mortgage. You can build equity over time by paying down your mortgage by paying an extra monthly payment and through the home’s appreciation.

 

Paying Down Your Mortgage

Scenario: You bought your home in for $200,000 with a down payment of 10%, resulting in a loan amount of $180,000. You secured a 30–year fixed–rate mortgage at 4.75% with a monthly mortgage payment of $939.00, not including taxes and insurance.

Over the years, you’ll see how your monthly mortgage payments lower your loan balance while helping you build more equity.

 

                                      Day 1             5 Years         10 Years          15 Years

  Principal paid               0                   $15,590          $35,063           $59,745

  Loan Balance             $180,000        $ 164,410       $144,937         $120,255

 

Appreciation

Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.  It’s important to note that some markets appreciate faster than others. It’s also possible for home values to depreciate due to economic conditions, your home not being kept up, or a drop in neighborhood home values. The best way to know what is happening in the market is to make an appointment with your Real Estate Agent!

Marilys Vélez

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