How To Use Equity After Purchasing Your First home

Numerous first time home buyers in The Greater Vancouver that I speak with, often ask questions about upgrading into something bigger after purchasing their first home. Today I am going to discuss how equity works and then go over a story for a client that I worked with last year who has now upgraded(one of my favourite clients)!

Basically, equity is the area of your home that you own outright (i.e., the value of your home minus any outstanding mortgages or loans). Your equity will grow as you make mortgage payments and as the value of your home rises. Guess what it means, then? Yes, it is time to begin planning your next course of action!

You can now use your equity in a number of different ways to move up to a larger home. A home equity loan or line of credit, which is essentially a second mortgage on your existing property, is one alternative. This can provide you with the money you need for a down payment on your subsequent house or to pay for any additions or renovations.

Another choice is to simply sell your existing residence and put the equity you have accumulated toward a down payment on your subsequent residence. If you've lived in your existing house for a time and have accumulated a sizable amount of equity, this is a fantastic alternative.

Therefore, if you're a first-time home buyer with plans to move into a larger property in the future, remember to monitor your equity. You may quickly move up to your ideal home with a little bit of preparation and some astute financial decisions.

Time for the fun stuff; my amazing client Tim! Tim was a first-time home buyer that I worked with a few years ago who was once utterly afraid of the idea of purchasing his own house. He paced back and forth in his empty apartment, "I'm not ready for this!" he screamed. "What if I make a mistake and my mortgage is underwater as a result? What if, even worse, I'm forced to live in a tiny, claustrophobic house forever?"

Tim was aware that he couldn't continue renting indefinitely despite his misgivings. He desired to accumulate wealth and possess a home that he could call his own. He took the plunge and bought his first house after taking a deep breath and saying a prayer.

Tim initially believed that he had made a serious error. The costs of homeownership appeared prohibitive, as did the monthly mortgage payments. But as time went on, Tim began to unwind and relish his new house. In addition to painting the walls and establishing a garden, he also invited his friends over for a BBQ.

Tim began to feel the want to move up to a bigger home a few years later. He was prepared to move on after accumulating a sizeable amount of equity in his current residence. He therefore sold his existing home and used the equity he had amassed to put a down payment on a bigger, roomier home.

The best thing, though? Tim never turned around. He was delighted with his new residence and appreciative of having taken the chance to purchase his first home all those years before. Even though it was frightening at the time, everything had been worthwhile in the end.

Let us know if you have any questions about buying/selling or have any questions in between by clicking the link below to our contact us page :)

https://thewallingtontwins.com/contact.html

Until next time!