|
Beginners Real Estate Investing Guide
Real Estate Investing - Ask
Questions Before Making an Investment
First Time Real Estate
Investor
Real Estate Investing - Planning
Your Investment Strategy
How to Find Real Estate
Investment Properties
Getting a Professional Home
Inspection
Large Profits From Inexpensive
Real Estate Repairs
Real Estate Investing - Costs
and Fees
Real Estate Insurance
and Risk Management
Real Estate Investment Risk
Part 1
Real Estate Investment Risk
Part 2
Getting The Best Return For
Your Investment
Creative Financing
For Real Estate Investors
Real Estate Investment Tax
Considerations
Real Estate Rental Properties
- Great Investment or Nightmare
Real Estate Foreclosures - Great
Deal or Headache
Flipping Real Estate for Profits
Slow Return On Real Estate
Investments
Negotiating for the Best Possible Real Estate
Deals
Real Estate - A Time to Buy and a Time
to Sell
Creating Your Real Estate
Investment Strategy
Investing and Growing
Your Real Estate Portfolio
Commercial Real Estate
Investing
Real Estate Marketing
Understanding Real Estate Law
Do You Need An Real Estate Agent?
What The Real Estate Mortgage
Lender Sees
Do You Have A Career In Real
Estate?
Rural or Urban Real Estate
Investments?
Real Estate Investing on the
Internet
Real Estate Investing
- Property or Paper? |
Real Estate Investing - Introduction
How to Build Equity in any Real Estate Market
The value of your home changes quite often. When there are fluctuations in
the housing market the value of your home changes. When you make renovations,
or work to maintain the condition of your home, the value changes. It seems
that everything has a constant effect on the value.
The equity that you have in your home is determined by the amount you still
owe on your home, subtracted from the current market value of the home. For
example, if your mortgage now stands at $160,000, but your home is worth
$250,000, you have $90,000 worth of equity in the home.
Because the majority of what you are paying in the first few years of home
ownership is interest, and not on the principle balance, it takes some time
to build up a large amount of equity. If the real estate market takes a nose
dive, it takes even longer, and in fact, it may totally wipe out any equity
that you have built up.
The national average of appreciation is roughly 7% each year, but this can
change. In fact, in the past, the appreciation average has jumped as high
as 20%, but this is not common. However, uncommon as it is, it still makes
real estate investment quite lucrative.
What most people don't understand about real estate investing is leverage.
When a property owner owes more than 80% of the value of the home on their
mortgage, they are essentially eliminating their personal wealth. They find
that interest rates are much higher, and the available cash that they have
quickly dwindles. You must learn to protect your equity!
The easiest way to protect equity is by getting a fixed rate mortgage loan,
for a term of anywhere from 10 to 50 years. While shorter loan terms are
better for your wealth, it does mean that payments are higher. Get the lowest
term that you can afford.
Another way to protect equity is with equity building plans. For instance,
you can make payments on the property twice a month, instead of once a month.
You could also pay your normal monthly payment, and make an extra payment,
with a direction to the mortgage lender that the extra amount paid is to
go strictly on the principle, not to interest. This method builds equity
very quickly.
Because the interest on your mortgage loan is calculated daily, on the principle
balance, you can come out better by making half of your monthly payment during
the first week of each month, and the second half of the payment during the
third week of the month. Instead of interest accruing every 30 days, it accrues
every 15 days, making it cheaper.
Another option is to pay your regular payment, and then to make an additional
payment on interest. This again lowers the principle each month. Overall,
you should always look for a way to lower the principle balance, in order
to quickly build equity in the property.
• More
Articles
|
Beginners Real Estate Investing Articles
How to Advertise a Rental
Property
How to Build Equity
in any Real Estate Market
How to Find Motivated
Sellers
Developing a Profitable Real
Estate Investing Strategy
Bird Dogging: Getting Started in
Real Estate Investing
Buying Your First Home
Using Lease Options to Purchase Real
Estate
Real Estate Foreclosures
Increase Your Net Worth Through
Real Estate Investing
Interest Only Mortgages
Real Estate Investing
No Money Down Real Estate
Investing
The Power of the Lease Option
Real Estate Investing Tips
Real Estate Investments
Refinancing Your Mortgage
Loan
Paying Your Mortgage
Selling Your House without a
Realtor
"Subject To" Real Estate
Financing
Using Trusts as a Real Estate
Alternative
Search for Beginners Real Estate Investing Information
|
