How does equity in a home make money upon resale?

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I am completely lost on the concept of buying a home and the selling it before the mortgage is paid. How does this make money/contribute to a new mortgage?

In: Economics

11 Answers

Anonymous 0 Comments

Equity is basically how much money you paid into buying the house, so you would get that amount back when you sell the house, since you don’t owe that amount to the bank anymore.

So say the house costs 100, and you paid 50 of the loan off, and then sold it for 100. Because you already paid 50, you only owe 50 on the loan (mortgage) (ignoring interest rates for simplicity). So of the sale, 50 goes to the bank, and 50 goes to you, like it’s your equity being returned to you.

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