The Value of Building Home Equity
There are numerous advantages to owning a home. One of the
serious advantages is the equity that is built over time. As
equity builds, you create a pool of money to access in trying
times.
Home Equity
Equity is simply the value of a property after all debts have
been deducted. If your home appraises at $500,000 with a home
loan of $250,000, you have $250,000 in equity. Whether you
realize it or not, this equity can get you through hard times or
provide you with a funding resource. Let's look at some examples.
Emergency
If you get through life without any family or financial
emergencies, you are one lucky person. Unfortunately, most
people aren't so lucky. Home equity can provide a financial
cushion when life gets hard. You can use it to pay medical
bills, legal fees and any other expenses that arise from your
particular problem. You will be extremely thankful you purchased
a home if you ever run into this situation.
Education
If you've ever watched "The Simpsons," you may have seen the
episode where Bart and Homer go camping. Bart tells Homer a
scary story, but you only see the end of it and Homer screaming
in terror. The words Bart whispers are, "...and that's how much
it will cost to send Maggie [baby] to college." It is a very
funny scene until you, a parent, actually investigate the cost
of college tuition. Trust me, nightmares will soon follow.
Home equity can put an end to college tuition nightmares. You
can borrow against the equity to pay college expenses. As with
an emergency situation, home ownership will give you the ability
to pay the bills.
Making the decision to buy a home can be stressful and
frightening. As time passes, you will be incredibly happy you
made the leap.