Home buying and homeownership are arguably two of the biggest life goals you can set for yourself, also two of the biggest responsibilities you will ever have.
The process of buying a home will help give you an introduction to basic industry terms, but it is important to understand that home buying and home ownership are two separate entities when it comes to process and execution.
After you purchase your home continue putting the same energy and enthusiasm you put into finding and buying a home into owning and caring for one.
As your home is likely your biggest asset, your home will significantly impact your overall financial health.
Variables like payment history, loan size, credit score, and net worth will all be hinged together, flexing in tandem with the habits you create as a homeowner.
It is important to understand some of the most common financial terms that apply to homeowners to be able to understand how this asset can benefit you moving forward.
Equity
Home equity is the market value of a homeowners unencumbered interest in their real property.
In layman’s terms, the value that represents the difference between what you owe on your mortgage and what your home is currently worth.
Home equity is a valuable savings, but it can also act as a valuable financial tool. Making sense of all the opportunities to take advantage of your home’s equity can be confusing.
Tapping into your home equity is a common practice for homeowners looking for a low-cost way to borrow a large sum of money at a favorable interest rate.
Home renovations and remodels are typically initial catalysts for investigating the uses of a home’s equity.
If you still find yourself curious yet confused, you have places to turn to, to make your options a lot clearer.
You can review a guide to help you decide whether you are looking to make sense of your home equity, learn about tax treatments, or how to access your home equity.
Mortgage
Assumably, you know that a mortgage is an agreement between a homeowner and a lender regarding borrowed funds to purchase a home, and the interest rates, and repayment terms associated.
But what is less commonly known is that there are three main types of mortgages available for prospective homeowners, each with their own distinctions, pros, and cons.
Since the length of a mortgage is significant, taking the time to understand the ways in which the three most common types define themselves can help you choose the right mortgage for your long-term financial goals.
Conventional mortgages are ones that are not offered or secured by a government entity.
Fixed rate mortgages are home loans that have a fixed interest rate for the entire term of the loan.
While an adjustable-rate mortgage comes with an interest rate that varies throughout the life of the loan.
Discussing which type of loan (or mortgage) best suits your individual financial needs and qualifications can be done with your bank, real estate agent, or financial planner.