| Too many people today have bought homes in good | | | | no matter what the value is, you have equity in your |
| neighborhoods where their houses should increase in | | | | home. That is, even if the market value has gone |
| value over the years only to see the opposite | | | | down, the house is still worth something which you |
| happen. Why? For one thing, that area might have | | | | now own. Staying in your home for such a long |
| been in a large town with excellent employment | | | | period is like a forced retirement plan. That is, when |
| opportunities. As those jobs disappear for one reason | | | | you retire and have your house paid off, you will be |
| or another, the home owners must move to find | | | | able to live rent free (although still paying property |
| new jobs. These forced sales lower the prices on the | | | | taxes) or you can chose to sell the house in order to |
| houses in the area. Who has not seen nice middle | | | | move into a smaller retirement apartment and invest |
| class areas become lower income housing in as little | | | | the remainder of your sale price. Thus you will have |
| as ten years? In other words, in the good old days | | | | put your money into this house for 25 or more years |
| Dad had a job for life and, therefore, spent his life in | | | | and then be able to sell it and use this money for |
| the same house. Today's society just simply does | | | | your retirement even though you will not make back |
| not work the same way. You may buy a house in an | | | | what you originally paid for it 30 years ago. |
| area of rapidly increasing home values today and in | | | | The other aspect in buying a home is the interest |
| ten years not be able to sell it for even what you | | | | you pay on the loan over 30 years. That is, a house |
| paid for it. We do not see this trend changing back | | | | that you buy for $120,000 will actually have cost you |
| to the good old days as there is no more job | | | | over $200,000 by the end of the mortgage. If the |
| security in the world. Therefore, you need to re-think | | | | house has appreciated in value, then you hope to |
| your ideas on building equity in your home. | | | | make up some or all of this interest payment. |
| However, there is another aspect to equity if you | | | | However, today the average income family will not |
| are sure you will be living in your house for say 25 | | | | see this happen. So now you have a home you paid |
| years out of a 30 year mortgage. In this case, | | | | over $200,000 for and can only sell it for $110,000 |
| because you have paid off most of the house value, | | | | after depreciation. |