Save your money, save your home, save the economy!
Welcome Home!BY THETEAM@ELICH.COMCongratulations! You have purchased your first home. You’ve learned how to budget and how to plan. Now, it’s time to learn how to save even more and to protect your greatest investment. Saving is a responsibility and obligation that you owe to yourself and your family. Owning your home and maintaining equity in your investment can be a way to ensure a solid financial future. Owning and properly maintaining the property offers a sense of accomplishment. Long-term home ownership can provide beneficial retirement security through the growth of equity.There was a time, not long ago, when home ownership was much more difficult to achieve than today. Moreover, people would never think of borrowing against their home for any reason, except as a last resort. Today, however, home ownership is relatively easy to attain, and people borrow against their home’s equity for many reasons. The two most common are to pay for home improvements and to consolidate debt. Other uses for equity include – tuition, medical expenses, living expenses during unemployment and big-ticket purchases. By owning your own home and growing its equity, you give yourself a financial resource not available to renters. However, there is a dark side to using equity to consolidate debts. You might be tempted to run up the credit card balances again, leaving you with big debt and no equity. If you default on a home equity loan, you could lose your home, your biggest asset. If your home’s value drops, you can end up owing more than the house is worth – it’s called being “upside down” on your loan – a bad situation if you need to sell.Home ownership also includes the cost of home repairs and maintenance. As an owner, you must pay for any unexpected items such as a new roof or heating system. Either build your equity or commit to a monthly savings plan to help with unexpected expenses. You can “save” money by paying down your mortgage more quickly. By paying an extra $100 per month on a $100,000, 30-year mortgage at 6 percent, the length of the mortgage is shortened to 21 years – almost 30 percent! This increases equity and saves significant interest on the end of the loan. The extra equity can be borrowed back for home improvements without turning your loan “upside down.” Additionally, saving just $25/month at 5 percent interest will result in almost $15,000 in savings over 25 years! One hundred dollars a month (just over $3/day) at 5 percent results in almost $60,000 in savings in 25 years. Do both – pay down your mortgage and save a bit each month – you’ll have what you need no matter what the expense or emergency.Colorado Economist, Tucker Hart-Adams, spoke to the Summit Association of Realtors a few years ago and said that to her knowledge, “This is the first time in history that people are using their homes like credit cards; this is not good.” We should all develop the habit of saving for college and paying off debt, etc. by using our parents’ method of scrimping and saving, rather than by refinancing. Your own financial well-being, and that of this and future generations depends on it. Let’s rethink and relearn ways to save and use our money responsibly, for a better future for all. Find out how at:• http://www.choosetosave.org – As part of its mission, Choose to Save develops user-friendly, multimedia materials to help individuals plan and save for their financial future.• http://www.incharge.org – The InCharge family includes InCharge Education Foundation, which provides award-winning products and materials that support the personal financial literacy needs of consumers worldwide, and InCharge Debt Solutions, which provides professional credit counseling and education services. WELCOME HOME! is compiled each week by the TheTeam@ELICH.COM. Butch Elich has been helping customers with their real estate needs in Summit County for over 20 years, and is the current president of the Colorado Association of Realtors Housing Opportunity Foundation (CARHOF). His team includes office assistant Claire Albers and associate broker Paula Parker. Find the ELICH.COM Team at RE/MAX Properties of the Summit in Frisco. They can be reached at (800) 806-9518 or at email@example.com.
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