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[CALCULATOR CLICKING]
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A woman with a visor on sits at a table pressing buttons on a calculator while surrounded by papers. She wears a Navy Federal Credit Union blue polo. A man approaches holding a mug.
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BRYAN: Do you ever stop working?
AMBER: This isn't work, Bryan. I just got my house appraised. And guess what?
BRYAN: You're going to--
AMBER: I've got equity coming out of my ears. Woo! No big deal. I just used a multi-pronged approach made up of lots of factors, from strategic neighborhood research to upgrades to bonus principal payments.
BRYAN: Plain English, please.
(DESCRIPTION)
Text, Navy Federal Credit Union. Making Cents.
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AMBER: Come on over, Bryan. We're talking equity here. What it is, how it's built, and ways to raise it.
[CALCULATOR CLICKING]
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What is equity, and how do you build it?
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Amber here, your home buying helper at Navy Federal Credit Union.
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Amber separates two sheets of paper, revealing a blank paper. A house materializes on the paper.
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Equity is like a major home ownership perk. It's the difference between how much you owe on your mortgage and the market value of your home. Basically, it's how much of the home you own.
BRYAN: OK, so you can't have real equity in your home for years, right? I mean, we're talking a 30-year timeline here.
AMBER: I can see how you'd think that. I did too, until I became the queen of my own castle. But it can happen a lot faster, especially if your home's market value goes up. See, houses in my neighborhood are selling at higher prices because fewer houses are for sale. That's called low inventory. Plus, we just got a grocery store within walking distance.
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The value of the home rises from $323,338 to $350,000.
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So my home's value went up too.
Get this, my original price was $350,000. Now my home is worth about $370,000.
(DESCRIPTION)
It rises further from $350,000 to $370,000.
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With my down payment, the loan payments I've been making, plus putting tax refunds and bonuses toward my principal, I owe about $298,000. That means--
BRYAN: You have $72,000 in equity.
[CALCULATOR CLICKING]
Whoa!
(DESCRIPTION)
Amber presses a button on the calculator.
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AMBER: But you're not totally at the mercy of market conditions. Your home is an asset you can invest in. Want to take a stab at what else you can try to help increase your home's value?
BRYAN: Maybe like doing strategic home improvement projects, like adding a bathroom.
AMBER: Bryan, yes! That's so good. What about the other way to build equity-- decreasing how much you owe on it.
BRYAN: Hmm. You could make a bigger down payment upfront, pay extra towards your principal, switch from monthly to biweekly mortgage payments, keep making on-time payments.
(DESCRIPTION)
Paper money moves from the house to years on a calendar.
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AMBER: Remember, in the first few years of your mortgage, you pay much more in interest than on your loan. That balance shifts with time. So you build more equity with each payment.
BRYAN: So that's what you meant by a multi-pronged approach. You chose a great location, added that second bathroom, and made extra payments on your principal. Talk about making cents of your money and equity together.
AMBER: Yep. And here's a smart money strategy for you. If you've got a big expense coming up, check our Navy Federal Equity Calculator to see how much equity you have available. There are a few ways you can access it if you need it. It's your money, after all.
[CALCULATOR CLICKING]
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Text, Navy Federal Credit Union. Making Cents.
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For more smart money strategies, visit navyfederal.org/makingcents. Navy Federal is federally insured by NCUA.
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Our members are the mission. This information is not legal or financial advice. Instead, it is provided for general information purposes only. You should consult your own attorney or financial advisor regarding your particular situation. Images used for representational purposes only. Do not imply government endorsement.
