· 
Home Purchase Loans
Equity, Equity, equity, equity
The equity that you build up in your home, condo or town-home is important to your stability, financial health and future net worth. Having a high equity level in your home is where you want to be, while having low equity levels make your situation more vulnerable, especially if your region, profession or the overall nation has some for of temporary or long-term economic shock.
Some recent stats on borrowers in the U.S. are:
- Around 1 out of 10 borrowers was in a zero or negative equity position at the end of 2005. This is definitely not where you want to be, so if this is you, do a financial analysis on yourself, see where you can cut spending, then maybe just maybe, if it is right for you then dump more money into the principle payment on your mortgage.
- By the end of 2005 around 29-31% of borrowers had equity cushions of less than 30% and around 44 - 46% of borrowers had equity cushions of less than 30%. Better than the above situation but still not the greatest. At this level you can more than likely qualify for a Home Equity Loan, but carefully analyze how you are going to spend the money. Are you going to blow it on beer and a new boat probably a bad idea - a boat is a depreciating asset - looses value over time) or re-invest the money back into your home (good idea!). Your home has a 1000 times better shot of increasing in value than a boat.
Some important questions to ask yourself:
- How BIG is your home equity cushion? (the larger the percentage the better)
- How much more your home worth is compared to the debts that you have loaded onto your slice of the American dream? 1 st Mortgage? 2 nd Mortgage? Other credit lines?
- What in the heck is your equity stake? Fine out! Is it 5%, 10%, 40% or heck yea! 50% or above.
Equity
