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Equity Matters A LOT… Just Ask Freddie Mac

Monday, November 23, 2015   /   by Vanessa Saunders

Equity Matters A LOT… Just Ask Freddie Mac

Equity Matters A Lot... Just Ask Freddie Mac | Keeping Current Matters


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 Equity Earned | Keeping Current Matters


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.


Average Home Equity | Keeping Current Matters


Bottom Line


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



“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. Meet with a real estate professional today to explore your options.

Global Property Systems
Vanessa Saunders MBA MIMC CIPS - NYS RE Principal Broker
56 Lafayette Avenue Suite 320
White Plains, NY 10603
914-290-5258


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The information appearing herein has not been verified by One Key, Inc or by any individual(s) who may be affiliated with said entities, all of whom hereby collectively and severally disclaim any and all responsibility for the accuracy of the information appearing at this web site, at any time or from time to time. All such information should be independently verified by the recipient of such data. This data is not warranted for any purpose.

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