The Importance of Home Equity - Ask Thach HD

http://www.thachrealestategroup.com/the-importance-of-home-equity/ The Importance of Home Equity - Ask Thach ==================== People are often confused about why home equity is so important these days. So let me tell you. Buying real estate property is one of the best investments you can ever make. Same goes with home equity. Let’s take an example. Suppose today, you buy a property at a value of $300,000. You hold it for five years. And its value has increased by $100,000 in equity (in five years). But most of the time, buyers don’t pay the full amount of value of the property. Instead they pay only a small percentage of it. Suppose you pay 20%, that is $60,000. Now you see, you made $100,000 just by investing $60,000. That is a huge return. But this is only one way of looking at it. Owning home equity has many other benefits, especially when you don’t have cash in your bank account. In such situations, you can use your home equity to resolve the matters. For instance, you can use your home equity for: Starting a new business – That is an investment as you can potentially make profits from it. Sending your kid to college – Pay the fees through your equity value by using it like ATM machine. Buy some more rental property – This is again a great way of multiplying your money. Making any other investment that can give you returns. So the bottom line is – you can use your equity not only in cases when you need money but don’t have cash, but also to make more money by further investment. But that is the smart way of using it. You can also lose it if you don’t act smart. For instance, in 2007-2008, many people in the US used their home equity to buy cars, boats, jet skis etc. They even used it up to go on vacations. But unfortunately, the market went down. And they lost everything. They used up their equity on buying stuff that could not repay them. So you see, it was not an intelligent choice. But you don’t have to make such mistakes. I advise you to always make smart decisions. Use your home equity wisely. Use it for something that you can retain even if the market crashes, as in case of recession. Buy more property with it, start business or invest in something that pays you returns. But beware, if the market goes down, their value will go down as well, but you will still own them. And when the market rises again after a while, their value will increase again. This way, having your money in the form of home equity will save you in the times of trouble. So don’t waste it on things that don’t give you any return. Yes it is okay to buy stuff and go on vacation. But make sure you don’t lose it all. Always keep a considerable portion of it with you. If you need any other information for making smart decisions and investments in real estate, you can watch our videos. You will find real and genuine advice. Just subscribe to Thach Real Estate Group on Youtube. And if you have any questions, feel free to ask in the comments. ============