When you are renting the rent that you pay every month - you never see that money again.
Your rent money helps your landlord build equity in the property that you are living in.
What is equity?
It is the Market Value of the property less the balance of all the liens on the property.
Here is a very simple example: Your purchased a property 5 years ago for $100,000 on a 30yr fixed rate home loan and have made regular monthly payments on it. Lets say after 5 years hypothetically you have paid off 10,000 off the $100,000 loan and your current loan balance is $90,000. But now after 5 years since you purchased the property the current market value of your property is now $120,000. Therefore your equity is $120,000 - $90,000 = $30,000
So if you sell your home today your will make $30,000 of this property less the closing costs and real estate agent commission of course.
A lot of people so agree that buying a home may come with some hefty initial costs (downpayment, closing costs, inspections), but you will make that money back over time in equity built in the home. Historically, homes appreciate by about 4 to 6 percent a year. Some areas are still experiencing normal appreciation rates. For the areas that have seen harder times since the recession, experts feel that the housing market will recover. Homeownership is not about making a quick profit - so don't pay too much attention to those house flipping strategies, rather homeownership is about building long-term wealth. A home bought for $25,000 in 1950 is most likely worth 10 times that in today's real estate market. You do the math!
I look forward to hearing from you.
Now lets Find Your Dream Home!
Realtor, DRE# 01891274
Notary Public, Certified Loan Signing Agent.
Century 21 All Moves