Equity Matters A LOT… Just Ask Freddie Mac

There are many reasons, both financial and non-financial, that homeownership remains an important part of the American Dream. One of the biggest reasons is the fact that it helps build family wealth. Recently, Freddie Mac wrote about the power of home equity. They explained:

“In the simplest terms, equity is the difference between how much your home is worth and how much you owe on your mortgage. You build equity by paying down your mortgage over time and through your home's appreciation. In a nutshell, your money is working for you and contributing toward your financial future.”

They went on to show an example where a person bought a home for $150,000 with a down payment of 10% ($15K), resulting in a loan amount of $135,000. The buyer secured a 30-year fixed-rate mortgage at 4.5% with a monthly mortgage payment of $684.03 (not including taxes and insurance).

The chart below demonstrates the home equity built after 7 years of making mortgage payments and assuming the historic national average of 3% per year home appreciation:

Home-Equity1

AND THAT NUMBER CONTINUES TO BUILD AS YOU CONTINUE TO OWN THE HOME.

Merrill Lynch published a report earlier this year that showed the average equity homeowners have acquired by certain ages.

Home-Equity.3

BOTTOM LINE

Home equity is important to building wealth as a family. Referring to the first scenario above,Freddie Macexplained:

“Now, if you continued to rent, and made the same payment of $684.03 per month, you'd have zero equity and no means to build it. Building equity is a critical part of homeownership and can help you create financial stability.”

Put your housing cost to work for you and your family. Let's get together to explore your options.


c5ee72df fc0c 46d3 aa54 a54c79e50248 336be00e febe 4320 8559 c3d9c32bb69a cf631911 9b8a 4517 b748 420fef65ca33 cb74ffd6 e681 454e 98b3 511fbd94393e f4bdda9f 31ce 45c4 8d4d 60fdfec9b3e3 4a8c39a5 c405 400f 995e 94bbfa049d6f 0b013f8c 7c2a 49c8 a1b8 298a28b26025 3fc2bc7d 7db2 46ce acc1 fb5f46ebac58 704aa382 ee8d 4d43 90ba feb49efa4195 725246bd f1ef 4a4d 9fa2 fadd93e1dc5b c258bd1f f96c 4931 bfa8 adff8ad17375 b3eeecff f6d7 4c04 91ac 791052480c05 8cc4cd80 4582 49cd 9f1d b38691df8a2d 75a90259 043e 4840 bbba f9cdf959c91f a5829dc7 2cb8 4194 b9a1 f580e9be2c6e db35084c 086f 45ea 9e9f 2f8283c574f9 eb57e8bd d893 469d b470 f22f8988358d 4808610c 8265 46f3 b209 9a9b02274d28 56605e7f f979 4116 a4c1 e3c969257c33 c7158b52 22b7 4f2d 8d6d fbe2fee0a56b d1996dac ad8b 4dd5 8b61 da4d1d5e9b91 3e050444 4a13 43a5 9965 07f735b3cb6d 16b6475b 37c6 4a5e ba59 db5d9c7f34a5