Create Wealth through Your Home's Equity

By Sheryl Landrum
LoanPage.com Columnist

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I went to a seminar recently by Douglas Andrews, the author of Missed Fortune: 101 and the upcoming Last Chance Millionaire. Mr. Andrews' premise is that high equity in our homes equates to a loss of economic opportunity to increase our wealth. If you have equity in your home, here is something to consider.

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Home equity is paper wealth, not accessible unless you pull it from your home. Unless you can access your money through liquidity, it really isn't working for you. If your home is worth $800,000 and your mortgage is $400,000 you have equity of $400,000; however, what if the housing market declines and your property drops to a value of $600,000, you have lost $200,000. If you had instead refinanced your mortgage loan and pulled out your equity when your home was at its $800,000 value, you would have generated $400,000 in income investing funds and who cares if housing prices temporarily drop? Now that you have tapped into your home's equity, how do you invest it?

Mortgage interest is still one of our best income protectors and many people refinance their homes to buy investment property. A great idea considering the National Association of Realtors states that "the national median price of homes bought ten years ago has increased 88%. The number of US households is expected to increase 15% during the next decade" Wow! What a great way to build more accessible income--buying property that generates revenue through rents and appreciation while generating tax deductible interest and depreciation as well.

If the above piques your interest, talk to your financial advisor and/or a trusted loan officer today. Begin creating wealth through accessing your home's equity. The money you earn will be your own.

About the Author
Sheryl Landrum is a Senior Loan Officer with Charter Funding, Inc. in Carlsbad, California and a freelance writer on mortgage issues.

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