The key to making wealth for many people today is owning a home, simply because it’s an instinctive savings account. As you make your monthly mortgage payments, the value of your home interests goes up. Any home owner will tell you there is no word that can be compared to Equity. As long as you’re making your monthly repayments, combined with the property appreciation, you can rest assured that you are building a nest egg which will balloon even before you realize. Equity, otherwise known as a savings account, can provide a way to put your children through college, retire, and deal with emergencies.
The best part in this whole deal is the fact that building equity is quite easy and simple – just pay your monthly mortgage payments. Conversely, depending on the type of mortgage loan that you get when you buy your home, there are some extra steps that you can take to accelerate the process of building equity. If you’re buying a home for the first time, it can be quite a daunting and stressful task, no wonder many people would take the first thing close to a mortgage loan that comes their way in order to close escrow. This is excusable, but may haunt you financially at a later date. If you can take time and step aside from the chaos for a while, you might factor in the following options which are likely to help you build the equity that you so much desire.
Many homebuyers will opt for a 30-year mortgage, which they assume is the best and safest option at their disposal. However, if you took a 15 year mortgage, you will automatically reduce the total interest payable on the loan while at the same time supercharge the growth of your equity. As long as you’re completely sure you will pay your monthly payments without any problem, it’s the best option you have instead of a long term loan. Not to be discouraged, here is another option at your disposal if you doubt your ability to meet the monthly payment requirements of a 15 year loan.
Another simple and proven way to build home equity is to make prepayments on your loan principal, as long as you have enough money to do so. This way, you will use your home as a savings account and since this should be tax free, it is sure to accelerate your equity growth process. Be sure to talk with your lender first before taking this bold step to find out whether there are prepayment penalties charged.
If you find any of the above ideas interesting, you can utilize them even if you already have a mortgage. By refinancing your mortgage, you get the chance to right the mistakes you made when your attention was more on getting through escrow. Discuss these ideas with your mortgage broker and see what options are available for you.
The best part in this whole deal is the fact that building equity is quite easy and simple – just pay your monthly mortgage payments. Conversely, depending on the type of mortgage loan that you get when you buy your home, there are some extra steps that you can take to accelerate the process of building equity. If you’re buying a home for the first time, it can be quite a daunting and stressful task, no wonder many people would take the first thing close to a mortgage loan that comes their way in order to close escrow. This is excusable, but may haunt you financially at a later date. If you can take time and step aside from the chaos for a while, you might factor in the following options which are likely to help you build the equity that you so much desire.
Many homebuyers will opt for a 30-year mortgage, which they assume is the best and safest option at their disposal. However, if you took a 15 year mortgage, you will automatically reduce the total interest payable on the loan while at the same time supercharge the growth of your equity. As long as you’re completely sure you will pay your monthly payments without any problem, it’s the best option you have instead of a long term loan. Not to be discouraged, here is another option at your disposal if you doubt your ability to meet the monthly payment requirements of a 15 year loan.
Another simple and proven way to build home equity is to make prepayments on your loan principal, as long as you have enough money to do so. This way, you will use your home as a savings account and since this should be tax free, it is sure to accelerate your equity growth process. Be sure to talk with your lender first before taking this bold step to find out whether there are prepayment penalties charged.
If you find any of the above ideas interesting, you can utilize them even if you already have a mortgage. By refinancing your mortgage, you get the chance to right the mistakes you made when your attention was more on getting through escrow. Discuss these ideas with your mortgage broker and see what options are available for you.
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