Equity

Navigation: Main page » Real Estate

 Print this page Submit articleComment article

Forex Trading Explained.
DrForex's top selling forex book Bird Watching in Lion Country - Forex Trading Explained in e-format.

Author: Mark Linton

Article source: http://www.fsbo-easy.com/. Used with author's permission.

Equity is the value of your home minus what you owe on your mortgage. For example, If Joe's home is worth $200,000 and Joe still owes $170,000, then Joe's Equity is $30,000.

All homeowners in Atlanta Georgia and surrounding counties should be aware of the Rule of 50/20. For most mortgages, after making payments for 15 years on a 30 Year mortgage you will have only paid off around 20% of your principle. In other words, after paying for 50% of the term of your 30 Year mortgage, you will have only paid off 20% of what you owe on your home. That's the Rule of 50/20.

In the early years your mortgage payments are front-loaded with HUGE interest payments. Only a small amount each month goes towards your principle. Therefore it takes a long time to build decent Equity in your home.

Most homeowners in the Greater Atlanta Georgia Metro Area only stay in a home for around 7 years, that's very little time to build Equity.

Remember, agent/broker commissions come out of your Equity. Using the above example, if Joe's Equity is $30,000 and he pays 7% commissions ($14,000) to an agent/broker, Joe will lose close to 50% of his Equity just to have someone sell his house for him.

If Joe sold his home on http://www.fsboatl.com he saves this expense and protects his Equity.

No Commissions - Just Results ™