When you think about the assets you own, does your house immediately spring to mind? It should, if you made any down payment on the house. That down payment – whether it was from funds out of your own pocket or money secured elsewhere – represents equity in your house. Your equity in a home is defined as the market value of the property minus any mortgages or liens on the home. If you just bought a house worth $350,000, and you had a 10% down payment, your current mortgage balance is $315,000, which means you have $35,000 in equity in your house. Knowing how to skillfully manage that equity – and properly maintain both your home and your finances so that you avoid financial loss or foreclosure – is part of the job of being a successful homeowner. Why Your Home Is an “Asset” and Not a “Liability” First, let’s take a look at why you should consider your home an asset – because not everyone views your primary residence as an asset. Some people say a home that you occupy isn’t really an asset because a home is constantly taking money out of your pocket with mortgage payments, … Continue reading Is My Home an Asset or a Liability?
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