Christian Community Mortgage Resource Network
Equity Building
Equity is the part of the property that is actually owned by the homeowner. For instance, if you bought a house for $100,000 several years ago and you've paid the mortgage down to $50,000, you have $50,000 equity in that house. Plus, if that same house is now valued at $150,000, you have another $50,000 in equity. Or, if the house was bought only a few years ago and therefore hasn't been significantly reduced, but the value of the house has increased by $50,000, there is $50,000 in equity (or value).
Because Americans have become so transitional, many people increase their equity by having the value of their property increase rather than reducing their mortgage significantly. The following are ways to increase equity other than appreciation (increase in value) of a property:
Make extra principal payments each month, or as often as possible, to decrease the amount of the mortgage. The added value to this method of increasing equity is that it also reduces the interest paid on the house and, over a few years, that can be a significant savings. Every dollar in principal paid is that much less interest on that dollar needed to pay!
Obtain a 15-year mortgage rather than a 30-year mortgage. Not everyone can qualify for the higher mortgage payments that a 15-year mortgage will require. But if so, equity will build faster and there will be less interest on the mortgage.
Make payments every two weeks instead of only once a month. If this is allowed by the lender, the 30-year mortgage will be paid off in about 20 years!
Make major improvements in the property that will add value to it. This gives the homeowner the added advantage of living with their improvements while still living in the house.
Suggestions For Reducing Your Debt
Don't carry credit cards when shopping.
Keep a log of everything purchased. Note when, where, how much and what the feelings were at the time.
Make a plan of action. Determine how and when each debt will be eliminated. Review the plan every month.
Involve other family members. Enlist them in getting a hold on spending and indebtedness.
Develop a budget. Work with it every month.
Learn to save for something really important. And learn how good it feels to bring it home ALREADY PAID FOR.
If, after you've reviewed your financial situation, mapped out a plan of action, investigated all the options that seem appropriate to you and you still find you're overwhelmed and unclear, consider contacting Consumer Credit Counseling Services. It is a nonprofit organization offering free or minimum-cost counseling through 1,200 locations nationwide. If you feel that you can't do it alone, you may need the assistance of professionals who can guide you. But, don't hesitate to take that action .
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