Building Equity


To rent or to buy – that is the big question, isn't it? The decision to buy a home can be a tough one. In fact, it's one of the biggest decisions you'll ever make in your life. That's why it's helpful to understand the benefits of buying versus renting.


Building Equity

One of the primary benefits of buying a home is that it's a financial investment. As you make monthly payments on your mortgage, you build equity.


Equity is the current market value of your home minus the amount you owe on your mortgage. In other words, it's the portion of your home that you actually own.




For instance, let's say your home is worth $250,000, and you currently owe $180,000 on your mortgage. That means you have $70,000 in equity. As you pay down your mortgage, your equity will continue to increase. In addition, as the market value of your home increases, so will your equity, which allows your money to grow by doing virtually nothing. This money can be used to borrow against in the future or to turn a profit when you sell.



When you rent, you help someone else build equity.


As a renter, your money typically goes toward paying your landlord's mortgage, and the landlord builds equity instead of you. Either way, you'll have to make a monthly payment, so why not let your money work for you instead of someone else?



What's Right for You?


The ability to build equity is a key advantage of buying a home, but your decision ultimately comes down to what makes financial sense for you right now. This is dependent on several factors, such as how long you plan to live in your home, what the price of the home is, what the cost of your rent is, and what mortgage rates are at the time.


That's a lot to consider. To help weigh out these factors, consider using a buy vs. rent calculator, which lets you plug in your information for a quick view of which is more affordable for you.






This company and its loan officers are not financial advisors. You should consult a financial advisor to devise a financial strategy that works best for your situation.

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