We all know the local real estate market has appreciated A LOT over the last 2-3 years. Home appreciation goes a long ways to increasing our equity in the home. Another way to increase equity is to pay down the mortgage. In the past, during the economic downturn, millions were plagued with homes that were not worth what they paid for them. My husband and I were one of those with a rental property in Arizona. The rent did not cover the mortgage, even with a substantial down payment. That negative cash flow each month is not what we intended with an investment property. So, I said, “Let’s sell it”. Wrong. The home’s market value was $60,000 less than we had paid for it. So, we had to find a way to cover this difference between the mortgage and the rent received each month until the home either appreciated enough and we could sell it, or we could raise the rent enough to cover the mortgage. I know many people found themselves in the same situation with investment properties and primary residences. Fortunately for us, the home has now appreciated to much more than we paid for it. And, we were in a position to be able to handle the negative cash flow at the time.
It’s good news (see below) that this trend has begun to correct itself. Of course, in areas of economic growth, this is more likely to be the case.
I’m happy to say, living in Boulder County, that our primary residence has appreciated quite a bit. However, I’m also happy to say, we just paid off the mortgage!! Yeah! This feels like true financial freedom. The extra cash flow each month will be used wisely to expand our retirement portfolio. Paying off a home is a huge milestone for all homeowners.
Call me if you are interested in the market value of your home.
The number of American properties that are equity-rich has reached an-all time high of 14.5 million, or according to new third quarter 2018 data from property data tracking firm Attom Data Solutions.
An equity-rich property is defined as one where the combined estimated amount of loans secured is 50 percent or less of the property’s market worth…Read More