CoreLogic’s latest report shows that home equity has improved for millions of homeowners across the country. However, some homes remain in negative equity positions and have a ways to go. In Ohio, it is estimated that 18% of mortgaged homes are underwater in value.
Before we go further, let’s define equity. Equity is the difference between the outstanding debt on a home, and what the home is worth on the market. In other words, equity is the “free and clear” cash value of the home after all mortgages and liens are paid off. To put it bluntly: equity means cash in your pocket when you sell!
When you are buying a Columbus home, buying wisely from the beginning puts you in a good position to earn equity on your home. You can build equity in a number of ways:
- Paying down your mortgage
- Making improvements on the home that increase its market value
- Passively benefitting by gradual increases in market value that happen over time
- Any combination of the above
One of the simplest ways to start off on the right foot with home equity, is to have a good down payment when buying your Columbus home. This can be a challenge for first-time homebuyers who have limited funds, and often begin with an FHA-backed mortgage that requires as little as 3.5% down. This doesn’t mean you shouldn’t buy a home, but it will take you a little longer to build equity.
Having home equity can benefit you whether or not you sell your home. You can borrow against the equity of your home to finance a remodeling project, or to pay for a college education, or any other reasonable purpose. Under our current tax code, the interest on a home equity loan is deductible from income taxes if you itemize your return. But use such a loan wisely; once you’ve taken out a home equity loan, you have a second mortgage. This means more outstanding debt and less cash in your pocket when it’s time to sell.
If you plan to retire in your Columbus home, you can put your home equity to work by taking out a reverse mortgage. Simply put, it’s a way of selling your home, but instead of having to move, you get to stay – and the bank pays you to live there for a specified amount of time. These loans require a great deal of caution and good forward planning, but it’s another way to benefit from equity.
Your Columbus Home Buying Strategies
Home ownership can provide you with financial stability and peace of mind. And if you plan wisely and buy smart, your home can build equity and put you in a strong position for the future. While there’s never a guarantee that a home will increase in value, home ownership gives you a chance to earn equity, whereas renting only benefits your landlord.
Begin with good advice! Learn what to look for in your new Columbus home buy reading our FREE e-book , “How to Buy a Home Like a Pro.” You’ll learn tips and tactics that will help you find the best home for the money.
As your Exclusive Buyer’s Broker, we represent you, and only you, in the home buying process! This means we look out for your best interests at all times, and make sure your needs come first. Best of all, our services do not cost you a dime. We’ll be happy to tell you how this works!
Contact us for help with your home buying questions! We are with you every step of the way…all the way home!
Andrew Show
Broker, CEBA, CEBA-M, CNE, CSP, ABR-M, e-PRO, GREEN
Buyer’s Resource Realty Services
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax
