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When you make an investment, your equity is the percentage of the investment that you actually own. So, as you pay off your mortgage, you build up equity in your home, and it becomes more and more valuable to you as an investment. The term of the mortgage may seem like an eternity, but when it ends the house is all yours.
If your home increases in value at any point, including while you're still paying the mortgage, you can sell it for a profit. And, while most other investments don't give you anything tangible while you own them, real estate gives you a place to live or work.
Just keep in mind that real estate prices don't always rise -- so there's risk involved, just as with any other investment. And if you're trying to sell in a slow market, you'll have a harder time finding a buyer for a house than for a stock or bond.
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Taking a loan on your loan
If you build enough equity in your home, you may be able to borrow against your equity to pay other expenses, such as home improvements, college tuition, or a new car. |
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