How does Equity workWhat does equity do?
What is the best way to obtain equity capital? Available equity" or "usable equity"? Are you paying taxes when you get equity? Which is equity? Although this statement may not be 100% technical, it will help you better understand justice. Own capital is the part of your assets for which you do not have a debt to the banka.
The simplest way is to first look at a real estate without equity. The following is a picture of a $100,000 real estate with a $100,000 loans. You do not have any equity because you have a 100% debt to the banks for the value of the real estate ($100,000). Now, we say our great-aunt is dying and leaving us $20,000, and we put that cash on the mortgage on our real estate.
This example shows that our credit is now only $80,000 because we disbursed $20,000. That means there's $20,000 in value we don't need to pay the banks for. That'?s our equity. Our debt to the banks is $0. Now we have "full equity" or "100% equity" in the real estate.
We have $100,000 in equity in this case. Keep in mind that equity is any value where we do not have to pay the banks any cash for that value. Since we don't have anything to pay the banks, the full $100,000 is our equity. Use the term equity in the first place. It is important to realize that justice is a "mental concept" and IS never IS existing in a physically way that can be seen and touched.
When you invest in shares, you don't often get hearing folks speak about shares. Why should you speak about it when you invest in real estate? It was because financiers want to get easier ways to get more cash without having to sell, and because bankers and creditors want to get more credit that the idea of equity was born. You as an investors can get cash if your real estate gains in value.
Equity " gives them collateral for their credits for creditors. What is your equity capital? If it'?s just equity, it ain't money. It' s just a "mental concept" that our flat is valued $X more than what we owed the banks. Selling your home gives you money.
The FULL VALUE of the immovable becomes effective to genuine money. The following example shows that we owe the banks $80,000 and we had $20,000 in equity. and we got $100,000 in cool cards. We still owe the banks $80,000. We' ll give the $80,000 to the banks and we can keep the $20,000.
That equity is now money. Another way we can turn this "mental concept" of equity into something palpable is to establish a credit. They call it "access to equity," but what they really mean is "getting a new credit from a local creditor. This is the only way they call it that, because the banks use the "added value" or "equity" to act as SECURITY for the loans.
You want to know that if you are in arrears and they have to resell the home, they will get their cash back. In the following example, we owe the banks $80,000 and we had $20,000 in equity. Since we were not really able to "access equity", we established a new credit. It' s the same as going to the banks and saying "I like a $20,000 credit" and they give you $20,000.
Yeah, you get $20,000 in hard cash, but now you owed the banks $20,000. This also applies to equity credits. Although folks say that they "access equity", all they do is get a new mortgage. And the only different to a consumer credit is that the interest rate is lower because the banks believe that if you are in arrears, they can buy the home and get their change back.