When you own a home and pay a mortgage, you’re slowly building “equity”. Equity is the difference between your home’s current market value and the balance you owe on your mortgage loan. The amount you pay monthly toward principal pads your equity.
Historically, real estate values almost always rise. This is called “appreciation”, and it’s another way you could build wealth by owning a home. The national average appreciation rate is about 3% to 5%. That means if you purchase a $300,000 home today, after 5 years at a 3% appreciation rate, your home could potentially gain almost $50,000 in equity.
However, many factors come into play that determine the value of your home including its condition as well as current marketing conditions. For example, thanks to increased demand and low rates, home values in 2021 appreciated an average of 16.9%. That’s why it’s best to consult with a real estate professional, like myself, who can help you truly understand what it means to be a homeowner.
If you have any questions or want to learn more about building wealth through homeownership, don’t hesitate to reach out!
John D. Reyes
Mortgage Loan Originator, REALTOR®, Marketing Strategist
Direct: 909.917.5567
DRE #01719218 – Higher Realty
NMLS #2241612 – EZ Fundings Home Loans