>>512241203Equity is equity regardless of the price.
The average boomer paid $30,000 for their house
As they paid down their mortgage they acquired equity. really slow at first because most of their payment went towards interest.
after 10 years on a 20 year mortgage you reach the tipping point, where more of your payment is going toward the principle instead of interest, this is where your equity grows fast. after 15 years of payments a boomer had about $20k equity after 20 years they had $30k equity. they gave the bank $30k in interest on top of the $30k that they borrowed
so in reality they would be $30k in the hole, but magically their home has more than doubled in value, so we call it equity. depending on the market, their house could be worth $90k thats the 30 they paid for the house, plus the 30 they paid in interest, plus the 30 equity. In a better community (things change over time) the house might ne worth $180k now that's 30+30+30 and $90k profit
the profit part they have to pay capital gains tax on but not on the 30/30/30 15% capital gains on 90k = $13,500 to the state. in some states its less. that leaves them with $76,500
divide that by 30 years = $2,550 per year. Obviously they could have gotten a lot better return on investment in other ways, but they needed a place to live. in other words equity is where you pretend to break even.
Some people sell their equity to a third party, when a bank is going to foreclose. this gives them some of their money back, and save their credit score. the buyer negotiates with the bank for a payoff price.
Don't think that banks are stealing when they foreclose on a house. They paid for the house when you bought it, if you didn't make it half way through the mortgage, the bank hasn't made a dime. If they are forced to foreclose, because you aren't paying they lose a lot of money, because the house has to be auctioned off, and typically sells for a fraction of what it's worth.
