Kalamazoo Real Estate: We have great news about home equity. According to CoreLogic, (a leading provider of consumer, financial and property information, analytics and services to business and government) at the end of the second quarter in 2015, 91% of all mortgaged properties across the US again have equity and only 4.4 million properties remain in negative equity.Home equity is determined by the difference between the value of your house and what is still owed for the house. When homes lost value during the Great Recession, homeowners’ equity decreased because home prices dropped.
Negative equity occurs when the value is less than the mortgage owed. A few years ago there were a large number of homes with negative equity. The negative equity, combined with job losses and a host of other conditions contributed to the large number of “short sales” and foreclosures.
Having equity in your home is one of the ways that wealth increases and it gives you many options!
- Equity makes it possible to consider selling your home and moving up while the interest rates are still so low. Buyers are often able to move to a larger home and keep similar payments when interest rates are low.
- Equity often provides the opportunity for a homeowner who qualifies, to refinance their current home and lower the interest rate on their home or perhaps to refinance the existing loan and take out additional cash which can be used to finance capital improvements or pay off higher interest rate debt.
- Equity often also allows homeowners who qualify to take out a home equity loan which can pay off other higher interest debt or make improvements to your home.
- Positive home equity also enables owners to move to another home without having to pay out-of-pocket expenses to sell their home.
- Equity in your home or owning your home outright can also be a great source of financial freedom.
Building equity is a part of a long term financial health and growth strategy and is one of the reasons that people who own homes usually grow wealth more quickly than people who rent. A mortgage is often a forced savings plan. For some families allowing equity to grow is the best position. “Spending” the equity in your home is not something that should be done without considering all the implications and consequences and should be part of an overall financial plan that can lead to financial peace and security! The members of the Veenstra Team are strong advocates for wise financial decision making. We will provide free information and free home market valuations to ensure that you have the information you need to make good real estate and financial decisions.
Jason Veenstra of the Veenstra Team led the Financial Peace University Class (which was developed by Dave Ramsey) in 2014 at his church, The RIver. Financial Peace University is a great program that helps participants develop an overall strategy for managing money and developing financial peace. He hopes to be leading another class through the Financial Peace University in the future. If you are interested in finding out the market value of your home so you can make wise real estate decisions moving forward or if you are interested in learning when Jason will lead the next Financial Peace University class, contact the Veenstra Team at 269-350-5514.