Mortgage Advice Buy a Home Sooner to Build Equity
It can be very beneficial to buy a home you can afford sooner rather than later. A home allows you to build equity and with every mortgage payment you make each month, you are building equity in a place of your own – unlike a rent payment.
Equity is the difference between the value of a home and your outstanding mortgage balance. The longer you stay in your home (and the more mortgage payments you make), the more equity you’ll have. Unlike most things you buy, a home will almost certainly increase in value over time – which builds even more equity.
Once you’re a homeowner, the payoff can be great. As the equity in your home grows, your financial flexibility also increases. Think of it as an extra source of financing for when the unexpected happens. An added benefit of borrowing money against the equity in your home, is it usually comes with a lower interest rate than other forms of credit, such as consumer loans, lines of credit and credit cards.
Here are some ways you can use the equity in your home:
- Pay off other debts with higher interest rates (like credit card debt)
- Renovate or repair your home – build a new room or put in a swimming pool
- For important life events – a wedding, dream vacation or university tuition
- Purchase a second home or vacation property
- Emergencies – like a serious illness
Investing in a home can have a significant payoff over time. And the sooner you begin, the sooner you’ll start building equity.