Appreciation

An increase in a property's value

A home generally increases in value over time. If you buy a house for $100,000 and sell it one year later for $110,000, the house has appreciated by $10,000. Appreciation increases your net worth, as well as your equity - the difference between your home's market value and the amount of money you owe on your mortgage. The three main factors that affect the future value of your home are its location and condition, and the selling price of similar properties in the area.

See: Comparable sale (comp)
Compare: Depreciation

Amortization schedule

A time table of mortgage payments over the course of a loanthat shows how much is applied to both the principal andinterest.

An amortization schedule gives a breakdown of your monthly payments in principal and interest. During the early years of your mortgage, the bulk of your payments go to interest. So, even after 10 years of fixed payments on a 30-year loan, you’veonly made a small dent on the debt.

You can use an amortization schedule to figure out the equity you gain during your mortgage term. The longer you own a house, the more equity you gain. But, if you do not plan on keeping your home for very long, the equity can still increase due to other factors, such as appreciation and capital improvements.