Believe that for many of us, house is a "as many as possible" object. But the reality is that for many people, saving up a down payment from a home seems to have done their best, and even if they want to buy another house, it's hard to get a decent down payment at once. Would it sound like a fantasy if someone told you that "using your existing real estate of equity, would make it possible to pay down home without paying cash "? Yet, in fact, for senior real estate investors, equity is a powerful "weapon" that allows them to buy another set of investments without using their cash savings at all —— to create their own real estate portfolio. And what is equity? The equity in real estate term is called net house in Chinese. It refers to the value of the owner's interest in the house, in more direct terms: Net house value (home equity) equals house value minus house debt. To give an example, if your house's current market value $$600,000 and you have $400,000 outstanding loans, your net house value (equity) in this set is $200,000; and this $$200,000 is your asset. Most of the time, equity is an asset that exists only in "theory ", buried quietly under your real estate, invisible and untouchable —— unless you take the initiative to use it. How to use your equity? There are two ways, in general terms, to turn theoretical equity into real assets: to sell real estate or to make secondary loans. The obvious way to draw equity by selling real estate is that when you put the house on the market and sell it, the rest is yours except for the bank loans that haven't been repaid. More experienced real estate investors will choose to withdraw their equity, and further expand their investments in the form of secondary loans. Generally speaking, there are two common forms of drawing equity through loans: Application for Credit Line (line of credit) Line of credit is essentially a personal loan based on your equity. When you make this application, the bank will approve a certain amount of credit line for you based on your equity, which you can use for real estate related renovation, upgrade, or for car purchase, vacation, other consumption. Draw equity down as an investment house This is a common way for senior real estate investors to equity ""—— use the equity of existing investment houses as a down payment for another investment house loan to buy another investment real estate. without paying cash How to draw equity as a down payment to buy an investment house? if you plan to use equity to buy investment houses, the first thing to do is to value your house so that you can understand exactly how much equity you have available. Keep using the previous example —— assuming your house is valued at $600,000 at the current market value and you have $400,000 outstanding loans, which means your net house value (equity) in this set of house is $200,000. But it's important to note that this $200,000 is not the amount you can finally lend from the bank. When a bank evaluates a loan with a equity, the usual maximum loan amount is 80% of the valuation minus your outstanding amount debt, In this case: $600,000 * 80% – $400,000 = $80,000 Not hard to see, the equity, you can actually extract and utilize is lower than the theoretical value —— but it is still a very substantial down payment. With an overview of your ability to borrow from equity, you can choose your preferred investment according to your actual situation real estate 、 and contact a professional loan broker to submit your loan application. Of course, as with other ordinary loan applications, banks will also be able to assess your income and expenditure, liabilities, real estate purchased, and other factors in a comprehensive way; and, if you are willing to pay for loan insurance (lenders mortgage insurance), you may be able to borrow more than 80% of the value. What things need attention? When you decide to use equity for real estate investments, make sure you have the right financial cushion. When you don't have extra cash on hand, it's best not to use all equity for real estate investment. In addition, before taking action, you may want to consult a professional, detailed understanding of the entire loan and investment process, and combine theory with your actual financial situation, macro considerations of feasibility. Lastly, make sure you have a professional investment team around you —— investment strategists, good loan brokers, conscientious and responsible real estate transfer lawer, let them solve the problems on the investment path for you quickly and efficiently, and you can also have more time and energy to expand your income and accumulate more equity. faste The Asia Pacific Group experienced investment strategists can help you if you want to learn more about equity or plan to make real estate investments through equity! Click the button below to book a free investment strategy analysis!
What exactly is house net worth (equity)? How do you use it?
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