The opportunity to build equity is one of the prime advantages of home ownership. If you are a homeowner, or if you plan on buying a Barron County home or parcel of land, here are some facts about equity you should know!
Equity is the difference between what you owe on your home or property, and what it is currently worth on the market. Equity is your “free and clear” ownership stake. When you sell your home, your equity value translates into the funds you personally receive at closing – minus, of course, your closing costs and sale expenses.
There are 3 basic ways to improve your equity:
1. Time. In the future, your Barron County home or land will likely be worth more than you paid for it. This isn’t a guarantee; home and land values can decline of a number of reasons. But if you buy wisely in a good location, the odds are in your favor.
2. Improving the property. Focus on cost-effective home repairs and practical updates for the best return on investment. If you own raw land, you can potentially improve its value by clearing an area for vehicle access and a home site. Let us take a look at your property, and we can give specific ideas!
3. Paying down your mortgage. Making additional payments towards the principal balance of your loan reduces your interest expense, while improving your equity ratio.
You can build equity faster by combining any of the above! One word of caution: as your equity improves, you may be tempted to borrow against it. A home equity loan is essentially a second mortgage, which means another monthly payment and another lien against your property. When you sell your home, any outstanding mortgages will need to be paid from your sales proceeds.
If you are ready to buy or sell a Barron County home, you can trust the experts at Six Lakes Realty to help you succeed! We are a locally-owned family business with over 40 years of experience in Northwest Wisconsin real estate! Call us today for friendly, hometown service!
Six Lakes Realty
Office: (715) 924-4806