Home Equity

24 October, 2012 (21:36) | Relocation | By: Keith and Mary Williams

When it comes to buying a home, nothing is more important that home equity. Home equity can help your credit score, be leveraged for borrowing and will boost your personal net worth.
With home equity, people should realize that in getting a mortgage, they pay themselves back with every payment. However, the benefits of home equity are often overrated by home ownership proponents. Here’s why:
First of all the housing market has risks. For generations, home equity has been the holy grail of wealth accumulation for most families.
In 2007, the average family possessed almost $100,000 in home equity. Some sources say that home equity was responsible for nearly three quarters of family wealth.
This all has changed since 2010, where the recession has since ravaged median family wealth. Home equity plunged nearly 40 percent and was responsible for creating the lowest levels of middle class wealth in 10 years.
Home equity has value in two ways: when a person sells a home or as leverage for a loan. Usually, the amount of money a person gets from converting equity to cash is much less than a number calculated on paper.
Selling a home also comes with a number of costs. People usually pay 6 percent commission to realtors, plus legal fees and potential selling concessions. It is hard to receive 100 percent of the equity when selling a home. For more information about the market in Columbus, Ga. contact Keith and Mary Williams Real Estate.
Borrowing against equity often comes with bank fees and interest costs. Those who utilize a reverse mortgage usually can only borrow up to 80 percent of the equity’s value.
Home equity requires work to maintain. To hold value, owners will need to do things such as repaint the house and repair the house when things break. Letting a home’s curb appeal slip can kill home equity.
Even considering these risks, buying a home can be a wonderful experience with the right real estate agent, such as Keith and Mary Williams. Just be sure to consider all facets of home equity before making a long term decision.

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