Ignite FB Tracking PixelAn Introduction to Home Equity - Marsha Bell

An Introduction to Home Equity

by Marsha Bell 12/31/2018

Buying your first home is a big decision; one that involves a lengthy process of saving money, building credit, and planning the next phase of your life. However, owning a home comes with one major payoff: home equity.

Simply put, home equity is the amount of your home that you’ve paid off. However, it does get more complicated when we bring in factors like the market value of your home and how it shifts over the years.

In this article, we’ll discuss home equity and what it means for you as a homeowner. This way, you’ll have a better idea of what to expect when you finally make that last payment on your home or when you decide to sell.

Home equity and market value

As I mentioned earlier, home equity is more than just the amount you’ve paid toward your mortgage. Like most markets, the housing market shifts over time.

Most homes slowly increase in value over time. In the real estate world, this increase in value is called appreciation.

However, that doesn’t mean that your home is simply going to increase in value indefinitely until you decide to sell. As you will find out (if you haven’t yet already), owning a home can be expensive. Houses age and require upgrades. If you fail to keep up with the maintenance of your home, its value can diminish.

How to build equity

The most important thing you can do to build equity is to make on-time payments to your mortgage. Making extra mortgage payments will help you build equity even faster.

One method of paying extra on your mortgage that many people are adopting is to make bi-weekly payments. Twenty-six bi-weekly payments comes out to 13 full payments per year, the equivalent of making one full extra monthly payment.

The second method of building equity is something that you have less control over: appreciation. However, if you stick to a maintenance schedule for your home and keep it in good repair, you’ll most likely benefit from appreciation over the lifespan of your mortgage.

What can I use home equity for?

The most common way to use home equity is as a down payment or full payment on your next home. First-time buyers who don’t have a 20% down payment saved often buy a starter home and then later upgrade as their family grows and their needs change. In the years that they own their first home, they build enough equity to make a full down payment on their second home, avoiding fees like mortgage insurance.

Many homeowners planning on retiring in the near future use their equity toward their retirement home, often turning a profit in the process. If you plan on downgrading for retirement and have fully paid off your mortgage, you can often use your equity to pay for your next home in cash.

About the Author

Author
Marsha Bell

Real Estate is a relationship business. Although we negotiate and market homes, we are in the business of helping people through transitions in their lives (getting married, having babies, empty nesting, investing for family reasons) and for someone to invite us into that process is an honor and requires trust in us and our skill set.

I have been a resident of Marin for over 35 years. I raised my family, devoted time to volunteering at my children’s schools, kept an eye on local politics as they affected education and the quality of life in the region, and acquired an understanding of the cities and neighborhoods of the county.

I honed my skills as an event manager, through 18 years producing an annual gala raising funds for Okizu, which provides a camp for kids with cancer and their families. Overseeing details too numerous to count, my efforts raised over six million dollars with elaborate and creatively themed events. My real estate clients can be certain I will provide the same creativity and attention to detail on their behalf. My organization skills and sensitivity were also needed while serving as the project manager for the state of CA in a pilot program connecting low-income youth to pathways to jobs in the energy industry. Through my own efforts to downsize as my children left the nest, I can be a great help to others hoping to do the same – assisting them not only in finding a new home, but also with the difficult task of shrinking the volume of their possessions – all accomplished with a sympathetic understanding of the emotional aspect of this change. I also hold an SRES designation, taking this a step further with the needs and concerns of seniors.

Whether you’re looking to buy or sell in the Bay Area, I will assist you with every phase of the process. I listen and focus on what my client’s real estate needs are and make certain I exceed their expectations. I have a passion for my real estate career and I love what I do. My success is because of determination, focus and attention to details.

Authenticity, passion, professionalism — these three things show our humanity and build trust.

I look forward to assisting you through your transitions.

TESTIMONIALS

"We really enjoyed working with Marsha on the purchase of our house in Fairfax. Responsive to all our questions and fast moving pace of our purchase, Marsha was great."

- laurafayev 

"I can write a story about how amazing Marsha is. She made the process of selling our condo and purchasing our home so smooth. It is one of the most stressful things we've done. But with her patience, knowledge and overall outgoing personality got us through it. I would definitely use her again."

- robb bwi 

"IF I COULD GIVE MORE STARS I WOULD!! We moved from Austin, Texas with very little knowledge of what to expect from California real estate. Marsha helped us find a beautiful rental apartment to stay in while we searched for our new home and was extremely helpful and knowledgeable when learning the in's and out's of different areas of SF and Marin. Marsha understands the needs of a client. I always felt like I could contact her for any questions I had. There was a delay in the arrival of our furniture and Marsha lent us everything we needed to survive in our new house until our belongings arrived. That is going above and beyond!! I cannot impress upon you more how great our experience was."

- Gina S

"After 6 months of searching for a home and multiple heartbreaks we met Marsha Bell and felt an instant connection. Her down to earth personality, market insight and availability was exactly what we needed. Throughout the entire buying process Marsha was attentive, supportive and provided excellent advice as we navigated the largest purchase of our life. Marsha is an excellent listener with deep connections throughout the Novato market, a first class rolodex of tradesmen and inspectors, and an exceptional team. This coupled with Marsha's driven work ethic was instrumental in us closing on our dream home in just 22 days! We highly recommend Marsha Bell to anyone looking for a realtor."

- Jason C

"Marsha Bell is one of the best real estate agent I worked with for getting my american dream home come true. She was helping us from the day one, sending us with emails about various properties that match our complex requirements. I am originally from a different country, but Marsha explained all the process involved from seeing the property until closing of the escrow. She helped us in every step choosing the right home loan, performing inspections of properties, talking to planning dept, negotiating with seller for the contingencies etc., I would definitely recommend Marsha Bell with any kind of real estate requirements. If the time ever comes when I will be looking for a new home, there isn't any question on who my Realtor will be!"

- Srini

"People say that selling a home can be one of the most stressful things you can do, but thanks to Marsha I was informed, organized and on schedule for the whole process. As a result, I got my dream offer with the first open house. Having Marsha as your realtor will save you hours of stress and get you a great result."

- Heidi U. 

"Marsha was very attentive to all the details of the selling process. She was very professional and personable at the same time. I highly recommend her if you are thinking of selling or buying a house.

- flysky64 

" Marsha went out of her way to make buying our new home as painless as possible.  She was always one step ahead of us getting things set up and making everything happen quickly. I would highly recommend Marsha to anyone buying or selling a home.  She is very knowledgeable and professional but has a genuine down to earth helpful quality about her.

- Mark B.

"Marsha was more than generous in sharing her time and knowledge with my son and I as he searched for an apartment to rent in the difficult San Francisco market. She researched his needs thoroughly and was able to show us every possible type of apartment in his price range. Her extensive knowledge of the city and the various locations have eased his transition from Boston. Her friendly demeanor and great sense of humor as well as punctuality and easy accessibility made our experience a very pleasant one. I have no hesitation in recommending her highly for any real estate need!"

- Debra S. 

"Marsha showed me around several neighborhoods in San Francisco and set up nearly a dozen appointments for apartment showings. It was my first time in the city and I was pretty daunted by the process of apartment hunting. Marsha picked me up at my hotel each day and spent hours driving me around the city, making things much simpler for me. I was impressed with how organized she was--each day we had a meticulously crafted itinerary. In the end, she was instrumental in me finding my dream apartment in a great neighborhood. I cannot recommend Marsha highly enough."

- James R.