Benefits of Buying: Equity

Buying your first home or property can seem overwhelming. Between choosing an agent, neighborhood, and price range, it’s hard not to wonder if it’s even worth the trouble. The number of articles debating renting versus buying are at every corner, and one of the main topics that always prevails is equity. As soon as you purchase a home, you begin building equity. 

So what is equity and why is it important? Equity is the market value of your home minus the debt owed. For example, if you’ve purchased a home worth $300,000 and owe $275,000, you have approximately $25,000 in equity. Every mortgage payment made increases your equity as the debt owed decreases. This is unlike other large purchases we make, such as a new vehicle. As soon as the car or truck is driven off the lot, the value decreases. With real estate, equity typically increases the longer you own the property. Your home is essentially a savings account for you and your family. Each mortgage payment is another deposit to building equity and long-term wealth. 

When renting, the payment you make each month to a landlord is building equity, but not for you. Why have your money working for someone else, when it could be working for you? 

“Real Estate cannot be lost or stolen nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” – Franklin D. Roosevelt 


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