Ignite FB Tracking PixelAn Introduction to Home Equity - Becca Schweppe
Allen Tate Shelby
An Introduction to Home Equity

by Becca Schweppe 01/01/2019

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
Becca Schweppe

Becca Schweppe is a full-time Realtor® who professionally represents both the buyer and seller in North Carolina. With a personable, consultative approach to realty, Becca puts her clients’ goals first and makes customer service her top priority.

Becca is an honors graduate from Washington and Lee University and also has her Master of Public Health degree from the University of North Carolina. She brings to her business the same enthusiasm and energy, preparation and determination that she has brought to all of her academic and career endeavors. With experience in program development, consultation, and small business management, Becca brings a unique perspective to the sale of real estate. She knows how to listen, prioritize tasks, and execute plans successfully. Her experience with marketing gives her an edge in identifying and communicating the unique selling points of a home.

A North Carolina resident for over 20 years, Becca has in-depth knowledge of the local real estate market. One of her personal passions is property renovation. She and her husband, David, have successfully bought, renovated, and sold four homes for their family in the last 15 years. She uses her eye for design detail to help sellers stage their homes for maximum exposure to the marketplace. She listens to buyers’ wants, needs, and dreams and can advise on a property’s challenges and potential. Becca customizes her services for each client while leading them through the process of negotiations, inspections, loan acquisition, and closing.

Becca lives in Shelby with her husband, their three children, and their dog and cat. In her free time, she loves to be outside with her family, friends, and loved ones. Whether it be an afternoon on the lake, a day hike, or a kids’ soccer game, Becca enjoys leading an active life and is a true go-getter. She also has a long history of service to her community which includes volunteer roles at Shelby Presbyterian Church, the YMCA, her children’s schools, and 12 years of active service with the Junior Charity League of Shelby.

If you're looking for an honest, knowledgeable, and hard working Realtor®, then "Bring it to Becca!"

Licensed in North Carolina