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What is Equity?

12/6/2015

 
What is Equity?
 Equity is the difference between the current value of your property and the amount you have left on your mortgage loan. You determine the amount of equity in your property by subtracting your current balance on your loan from the current appraised value of your property. The amount of equity increases as you pay your loan balance down or by the value of your property increasing over time.


How to use Equity
 Using your equity to your advantage means receiving access to funds based on the amount of equity your property has incurred. The three ways you can do this are:

  • Redrawing any extra repayments you have made;
  • Applying for a credit increase on your existing loan; or
  • Applying for an additional loan using your current property as security.
The biggest reason people do this is to gain access to funds with a lower interest rate than your could get with a personal loan or a credit card.
Some things you need to consider include:

  • Restrictions. Make sure you understand any restrictions that might limit how much you can repay during the term of the loan.
  • The increase in your monthly payment amount and total loan amount. If you choose to access the equity in your property, the total amount you owe will obviously increase, resulting in an increase of the monthly interest you will pay. Also, if you borrow above your previously agreed loan amount, your monthly payment amount will also increase.


Keep in mind that if you fail to make your payments on time, you put yourself at risk of losing your home. Carefully review your options if you are considering using your equity to your advantage.  

If you have any questions contact my preferred loan officer that will have tons of information available to your advantage. 

​Information deemed reliable but not guaranteed. Information received from multiple third party sources not cited. 


Loan OFFICER

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"This is my second transaction with Eric. The first time Eric assisted us was back in 2016 when my husband and I were first time home buyers. During that time we had a little knowledge on the home buying process. We were young and eager to get into our first home! Looking back I can’t tell you how thankful we are to have had Eric on our team guiding us through the process. He truly had our best interest and future in consideration throughout the whole process. Fast forward now to 2019 we called Eric to sell our home. I must say after the first time working with Eric I didn’t think it could get much better or go any smoother than the first time. I was completely WRONG! Eric continued to exceed all the expectations we had set and crushed every goal we discussed. Eric listed our home and within 48 hours we received an offer. The offer lead to our home selling for $20,000 over the asking price! This is all credited back to Eric and his outstanding team that helped us throughout the process from our first meeting, to preparing our home, and finally the quick 30 day escrow. We are currently working with Eric on the purchase of our new home that will be completed in December. We have recommended our family and friends to use Eric’s services. They have all been very pleased with how quick and professional the process went. We are grateful for all Eric has done and will continue to do for our family for years to come!"
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