Title:
Build Equity By
Choosing The Right Mortgage
Word Count:
452
Summary:
Homeownership is
the key to building wealth for most people because it is an involuntary savings
account. As you pay down your mortgage each month, the value of your interest
in the home rises.
Keywords:
mortgages, home
loans, equity, prepayment, lenders, loans, loan, mortgage, interest rate,
payments
Article Body:
Homeownership is
the key to building wealth for most people because it is an involuntary savings
account. As you pay down your mortgage each month, the value of your interest
in the home rises.
Build Equity By Choosing The Right Mortgage
Equity is a beautiful word as every homeowner knows. Once you get used to
making your mortgage payments, you can rest assured that you are creating a
nest egg every month. Throw in the appreciation on the property and your nest
egg can grow large before you realize it. This savings account, better known as
equity, can provide the means for putting your kids through college, dealing
with emergencies and retiring.
Building equity is fairly simple. Just make your monthly mortgage payment.
There are additional steps you can take to move the process along at a faster
pace. These steps are all about the type of mortgage you obtain when you
purchase your home.
When you purchase a property, particular for the first time, it can be a
stressful event. Right or wrong, most people tend to take anything they can get
in a mortgage loan so they can meet the closing of escrow. This is
understandable, but can come back to haunt you financially. If you can step
back from the chaos for a moment, you might consider the following options that
will help build equity.
A 30 year mortgage is the default for most homebuyers. It is the first thing
that comes to mind and most assume it is the safest option. A 15 year mortgage,
however, is going to cut down on the total interest you pay on the loan as well
as supercharge your equity growth. The 15 year loan is far better than a longer
option, but only if you are absolutely sure you can meet the monthly payment
requirements. If you have any doubts whatsoever, there is another option that
you can consider.
Making prepayments on principal is a simple, proven way to build equity. The
idea is to make an extra monthly payment when you have sufficient cash to do
so. Effectively, you use your home as a savings account by doing this. The
advantage over other investments is the equity growth should be tax free.
Before taking this step, find out from your lender if there are any prepayment
penalties. Regardless, making two of these payments each year will quickly
build equity in your home.
If any of these ideas sound interesting, you can still take advantage of them
even if you currently have a mortgage. Refinancing your mortgage gives you an
opportunity to correct mistakes you made when you more focused on getting
through escrow. Talk with a mortgage broker to find out your options.