What does "building up equity" mean?

Answer 1

In terms of a home: Building up equity describes the increase in your homes value compared to how much you owe on your home. For example if you take out a mortgage for 200,000 and your home is worth 300,000, you would have 100,000 equity in your home. Then after 3 years your home is now worth $350,000 and you only owe 190,000, this would mean that you will now have 160,000 worth of equity in your home. Therefore in 3 years you would have built 60,000 worth of extra equity in your home.

Answer 2

Equity is what you own as a part of something that you don't own 100% of. If you own a house worth $100,000 that you have a $80,000 mortgage on, your "equity" is $20,000. Building up equity happens when you pay down your loan and your property goes up in value over time. Eventually, that $100,000 house may be worth $150,000 and your $80,000 will be paid down to $60,000. At that point, you have "build up equity" and have $90,000 of equity in the house.

This is a MUCH more effective way to make money long-term than working for it all!!!

Answer 3

The difference between what your house can sell for and what you have left to pay off on the mortgage is equity. Basically building up equity means either paying your mortgage down or buying a property and having it appreciate.

Answer 4

Simple answer:

Usually a house will appreciate about 3% a year in value.
Example, you buy a house for $100,000 in a year it is worth $103,000, then $106,000 the next year so you have more equity.
Also, you pay the principal down little by little.
So, you are building equity to refinance and consolidate debt after a few years or pull the money out of your equity if you need to.

Answer 5

Each property of real estate appreciates at a different rate, depending on property type and where the real estate is located. You buy a house in a residential subdivision of middle class people, primarily owner occupied and well kept. Between the time you buy it, get a mortgage and maintain it. While your paying down on the mortgage you owe, the residence should be appreciating in value and perhaps your making improvements. The difference between what you owe and what its worth is "building of equity" . I put website below that might provide additional information. Hope this helps

Answer 6

Equity can come from two sources: additional capitalization from the investors which can be in the form of cash, a property, a copyright or any other asset that can be used by the company. These assets are contributed by the investor in return for shares/stocks in the company.

The other source of equity buildup is to retain the net income of the company from one period and reinvest it in the business rather than distribute it as dividends.

Answer 7

Ok well the basic formula for anything is that Assets = Liabilities + Owner's equity. Assets are something you own, liabilities are something you owe, and equity is your net worth. When people are telling you build up your equity they are basically telling you to increase how much you are worth. There is intangible equity such as knowledge that is one way to increase your net worth and tangible equity like acquiring more assets or allowing your assets to become more valuable.

Answer 8

Contrary to popular belief this usage is not lazy or indecent nor is it as recent as many of you seem to think. At least as far back as the time of the American Revolution pls or plz was used in place of please in correspondence , again after the introduction of the telegraph, and most recently with the advent of text messaging, and all for the same reason, cost. During the early days of our country both paper and ink were expensive, so there were accepted methods of abbreviation to cram as much information into a letter as possible pls (or plz) was one example of this. When sending telegrams you were charged by the word (as in typing every 5 characters not actual words) so once again pls was used (among many other shortcuts u for you and so on) to make the sending of a message as cost effective as possible. As for text messaging, when first introduced, you may recall, we were charged per message we sent, so cutting letters out of messages meant a single text could be sent instead of two. It became a habit that carried over onto the internet, even though the need for the abbreviation no long exists,,,,to be fair though I am fairly sure you type OK or okay instead of Orl Korrekt which is the widely accepted original phrase the abbreviation came from, so can you really cast stones?