Buying a home is like opening a savings account. Every time you make a mortgage payment on your home, you bring down the principal of what you owe. At the same time, your debt is going down, and your home should be appreciating, (going up in value). This will increase the equity in your home even greater. We can define equity as the amount your home is worth versus the amount owed on your home. This equity could be used for future investments like a rental property or to pay down other debt you may have accumulated. Essentially your home becomes a bank that you can use to borrow against. or even pay college tuition for your children.
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