Wednesday, November 3, 2010

Home Equity - An Important personal finance tool to achieve financial freedom

Home Equity

Check the definition of Home Equity here.

Value of Home Equity will increase over time for TWO reasons:
1. Property price tends to increase over time (assumption)
2. Mortgage balance reducing over time (assume no refinancing)

What can you do with increased in home equity?
1. Keep it for retirement (when you finally have the property sold)
2. Refinance it for investment (since mortgage interest rate is the cheapest rate amongst all financing)