CAN YOUR HOME'S EQUITY BE INVESTED?

Owning a home is different from renting for a number of reasons. When you own your own home, you're in charge. Everything from interior decorating to lawn maintenance is your responsibility. Then there is the matter of equity. When you rent, each month you are helping your landlord to build equity in the property you live in. Equity is the money you've paid into a home. When you own the home, each month's mortgage payment goes towards building the equity you have in that house.

Equity can be extracted from the home for a number of reasons, from home improvements to certain investments. D. Shane Whitteker is the owner and lead broker at Principle Home Mortgage. They specialize in helping their clients understand the ways in which they're allowed to invest their home's equity.

"With equity growing in the U.S. this can be a good time to purchase real estate as an investment," Whitteker says. "Many people in the country are in a position where they could pull equity from their current residence as a down payment on an investment property."

According to Whitteker, unlike other types of borrowed money, money that comes from equity in real estate is considered a valid source of down payment on another property.

"Other sources for example would be an advance on a credit card or financing a vehicle that is owned debt free," Whitteker says. "These two options are not considered a valid source of funds for down payment on most real estate transactions.

Whitteker says the current trend in property growth is also an incentive to purchase an investment property as this is a stronger asset in times of growth.

"The old adage that says they're not making any more land is absolutely true. By leveraging the equity in your home, you can yield an investment that otherwise may be out of your reach."

Principle Home Mortgage is located in State College, PA. To learn more about how to use your home's equity to purchase an investment property, contact them today.