Money Talk With Slater

Making Money Across the Board

What is Equity?

Equity is an asset that can be used in a few different ways.

What is Equity?

Equity is the amount of your home or vehicle that you own after calculating the debt. To get that figure, deduct your loan balance from the market value of your automobile or home.

If you get a negative number, your car or home is valued less than what you owe on it. You have negative equity.

Example: Your home is worth $250,000, and you owe $100,000 on your mortgage. $250,000 minus $100,000 equals $150,000 of equity in your home.

How You Can Use Your Equity

Equity is an asset. With it, you can:

  • Borrow against it with an auto or home equity loan.
  • Get cash after you sell your home and pay any associated costs.
  • Use it as a down payment or to purchase another house.

How to Build Equity

If you have a nice amount of equity, the better off you will be. There are a few ways to increase equity:

  • Your debt amount reduces.
  • Your property value increases.
  • You can take an active or passive approach to build equity, based on your goals and your resources.

When you get a job, the first two things you put on your to-get list is a car and a house. Though as life goes on and you find yourself in need of some cash because of a big expense such as fixing a leaky pipe in your house or a new the plumbing in your home or a new motor for your vehicle, an equity loan could be the solution you are seeking.

Though, before you go down this road, it’s critical to completely understand equity, what it is, how it works, what you can do with it, and where to get it.

Regardless if you’re interested in an auto or home equity loan, contact a professional banker to guide you through the process.

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