Equity is a word that homeowners hear often, but there are myths around whether building a new home or buying an existing one is the best route to achieve it.
Eastbrook Homes representatives are experts when it comes to home equity, and have some valuable information to guide future homeowners in making a decision.
Martha Thomas has been with Eastbrook Homes for 24 years, along with 30 years in real estate. She explains what home equity is, and how homeowners can increase theirs.
Home equity is the difference between what a home is valued at as well as what you owe on it. For example, if a home is worth $200,000 but the homeowner owes $180,000, there is $20,000 worth of equity on the home. The money put into the home belongs to you; if there's $100,000 paid off on the house and you decide to sell, you're going to walk away with that $100,000.
When renting an apartment, the money disappears, and renters are lucky if they get their security deposit back. When paying a mortgage on a home, that turns into home equity, which eventually turns into homeownership.
A positive aspect of building a new home is that homeowners have a greater opportunity to build more equity into the home. When buying a home that already exists, everything's done so the equity is already set in place unless there are plans to remodel.
By choosing to build a new house, homeowners can build sweat equity. Sweat equity is the value homeowners are adding to the home by doing the physical labor of improving the home themselves. This can range from putting in beautiful landscaping, to finishing a basement.
With interest rates lower than ever, and if you're not planning to move within the next few years, it may be a good idea to consider buying a home and start building equity.
To learn more about Eastbrook Homes, visit eastbrookhomes.com.