Houlihan Lawrence Inc.
Anna Teyssonniere de Gramont, Houlihan Lawrence Inc.
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Home Equity Explained

by Anna Teyssonniere de Gramont 04/07/2019

Buying your first home is a big decision; one that involves a lengthy process of saving money, building credit, and planning the next phase of your life. However, owning a home comes with one major payoff: home equity.

Simply put, home equity is the amount of your home that you’ve paid off. However, it does get more complicated when we bring in factors like the market value of your home and how it shifts over the years.

In this article, we’ll discuss home equity and what it means for you as a homeowner. This way, you’ll have a better idea of what to expect when you finally make that last payment on your home or when you decide to sell.

Home equity and market value

As I mentioned earlier, home equity is more than just the amount you’ve paid toward your mortgage. Like most markets, the housing market shifts over time.

Most homes slowly increase in value over time. In the real estate world, this increase in value is called appreciation.

However, that doesn’t mean that your home is simply going to increase in value indefinitely until you decide to sell. As you will find out (if you haven’t yet already), owning a home can be expensive. Houses age and require upgrades. If you fail to keep up with the maintenance of your home, its value can diminish.

How to build equity

The most important thing you can do to build equity is to make on-time payments to your mortgage. Making extra mortgage payments will help you build equity even faster.

One method of paying extra on your mortgage that many people are adopting is to make bi-weekly payments. Twenty-six bi-weekly payments comes out to 13 full payments per year, the equivalent of making one full extra monthly payment.

The second method of building equity is something that you have less control over: appreciation. However, if you stick to a maintenance schedule for your home and keep it in good repair, you’ll most likely benefit from appreciation over the lifespan of your mortgage.

What can I use home equity for?

The most common way to use home equity is as a down payment or full payment on your next home. First-time buyers who don’t have a 20% down payment saved often buy a starter home and then later upgrade as their family grows and their needs change. In the years that they own their first home, they build enough equity to make a full down payment on their second home, avoiding fees like mortgage insurance.

Many homeowners planning on retiring in the near future use their equity toward their retirement home, often turning a profit in the process. If you plan on downgrading for retirement and have fully paid off your mortgage, you can often use your equity to pay for your next home in cash.

About the Author
Author

Anna Teyssonniere de Gramont

About My Life Polish born, French by marriage, American Resident since 2004. I know first-hand the stress and excitement of moving. With my husband and our 3 children we lived in Warsaw (Poland), Versailles (France), Singapore (Singapore), Chesney (France), San Francisco (California) and now Scarsdale (New York). I have earned Master’s Degree in Business Administration from Warsaw School of Economics. After working for a number of years in Finance Department for BOC Gases in Warsaw and Singapore, I dedicated my life to raising my 3 children, supporting my husband and taking care of our multiple homes. Since we settled down in Westchester, I have been actively involved in my children's schools' life. I offered volunteer work to Lyceum Kennedy, French American School of New York (FASNY) as well as Thornton Donovan School in New Rochelle. Recently, we have adopted a dog named Teepee from Pet Rescue in Harrison. Besides English, I speak Polish (native), French and some basic Russian. About My Work Whether you want to sell, buy or rent, we will work as a team. I strongly believe communication is key in building our relationship. You should never hesitate to pick up your phone and call or text me. I will always do my best to get you an answer or point you to a reliable resource. In this very competitive business of real estate, satisfied clients are the key to my success. Let me show you what I can do for you. Selling a home is a very important decision. Some try to sell their home by themselves. It is understandable, but 80% of homeowners hire a professional in order to sell quickly and for the best price the market can offer. Real Estate agents constantly monitor their local market. I have seen countless houses in every price range in many neighborhoods in Westchester. This extensive experience, helps me price your home right for the current market condition. We will work together to prepare your home for sale and professional photographs. Houlihan Lawrence lends their angent the best marketing tools to advertise your home. I will manage the showings for you and help negotiate the best price. Give yourself the best chance to find a qualified Buyer, so you can quickly and smoothly move to wherever you wish to be next. Talk to a professional Realtor. Talk to me. Buying a home is one of the most important decisions in life and for most people the biggest financial commitment, too. There is more to buying real property than finding a pretty home on-line. It is a process. It may go smoothly, if you understand it well and come prepared. As your agent, I can offer guidance and market information you need. I will show all the houses you will want to visit. I will verify information provided on the listing, I will give you information about its history and similar houses sold in the neighborhood to help you negotiate. As your agent, I will always have your best interest in mind! Don’t give up the chance to have a professional on your side. My area of expertise is buying, selling and renting residential properties in Lower Westchester NY: White Plains, Rye, Harrison, Mamaroneck, Larchmont, New Rochelle, Scarsdale, Bronxville, Edgemont, Eastchester, Hartsdale, Hastings-on-Hudson, Dobbs Ferry, Irvington, Ossining and Yonkers