Buy A Home to Build Equity

Are you on the fence about whether to buy a home or rent?

Building Equity

Home equity is the appraised value of your home minus what you still owe. Simply put, you build equity by making your monthly mortgage payments. Your mortgage payment consists primarily of interest and principle, but may also include other payments such as PMI (private mortgage insurance) and even your home insurance and real estate taxes, depending on the type of mortgage you have. Interest does not go toward paying off your mortgage but principle does. One way to build home equity faster is to make extra payments whenever possible as anything you pay above your interest amount each month goes toward paying off your principle.

Why is home equity important? Your house is considered an asset which means you can use your home equity to finance your child’s college education, remodel your house, buy another home as an investment or even supplement your retirement savings.

Buying Vs Renting

You won’t be able to build equity with your rent payment each month, but you can buy a home to build equity over time and lock in your monthly payment. With a fixed rate mortgage, you can freeze your monthly payment, so it never goes up. Rent will continue to rise over time, which could eventually price you out of your rental home or apartment.

The Zillow Housing Aspirations Report, Q1 2019 shows 52 percent of those surveyed complained that renting prevents them from earning equity and 45 percent said they regret renting instead of buying a home. Over 50 percent regret not being able to customize their home and think that their rent is too high. Other complaints about renting included problems with their property’s pet policies and not liking their neighbors.

There are certainly reasons to rent instead of buy, such as planning to be in the area for only a short time or needing to work on your credit rating in order to qualify for a mortgage.  Maintenance costs, having to pay real estate taxes and down payments are also cited as reasons to rent instead of buy.

However, if you plan on living in an area for a long time, raising a family or want your monthly payments to build equity over time, buying a home is a better option than renting. It adds stability to your life as you have more control over your home environment and can customize your home as desired. You’ll also have more flexibility when choosing a neighborhood in the best school district for your children and one that has amenities that you desire, like a pool and walking trails.

Buying New Vs Pre-owned

If you are concerned that buying a home may cost you extra money in maintenance and repair costs, consider buying a new home. Most new homes come with a builder’s warranty to cover any issues that come up within the first year. Many builders offer a “2-10 Home Warranty” that covers systems for two years and structural defects for 10 years.

Additional advantages of buying a new home are newer neighborhood amenities than older neighborhoods and being able to personalize the home with structural options, finishes and fixture upgrades to get the home of your dreams!

You can also save money every month on utility bills because new homes are much more energy efficient than homes five or more years old. The roofing, appliances and systems such as HVAC, plumbing and electrical, will be new as well so there’s less chance of unexpected repairs and maintenance. This makes the economic life of a new home longer than a pre-owned house.

Most builders have preferred lenders that can help you with new home financing and save you money at closing by paying for most, or all, of your closing costs. They can also help you get the lowest interest rate available.


While there may be economic or other factors in your life that make renting a better choice, you’ll need to buy a home to build equity with your monthly housing payment, which can become a major asset over time. Buying also gives you more control over your living environment and creates a more stable environment to raise a family.

Buying a new home is a more secure investment than a pre-owned home because appliances, systems and roofing are new and under warranty, and the additional energy efficiency of the home will save money each month on utility bills.

Some builders only offer a one-year builder’s warranty while others offer a more robust warranty such as the M2-10 Warranty Program offered by McKee Homes. It’s a good idea to research the different types of home warranties when buying a new home.

McKee Homes

McKee Homes has highly skilled team members dedicated to creating the best home building and buying experience possible in Eastern North Carolina. Areas we are building in include: Fayetteville, Pinehurst, Southern Pines and Aberdeen, Raleigh and Wilmington NC. Some of our new home resources we can provide you include: New Home Financing, Buyer Incentives and more.


Advantages of Buying a New Home

One of the biggest advantages of buying a new home over renting is that you will be building equity in your home over time. While rent continues to go up each year, if you procure a fixed-rate mortgage, you will continue to pay the same amount each month, year after year. Over time that can add up to a huge savings. In addition, you will be building equity in your home as you pay off the mortgage, especially if the property value increases which they generally do over time. There are additional expenses with home ownership compared to renting such as paying property tax, but if you plan on staying in the same area for awhile, it’s almost always smarter to buy than rent.

There are also advantages of buying a new home as opposed to buying a pre-owned home. You can often purchase a new home before it is completed, or even started, which will allow you to make any available structural options and select upgrades to get the home of your dreams. If you purchase a previously owned home, you may have to spend additional money to change paint colors, wallpaper, and other finishes, or even remodel the kitchen, bath or other rooms to get the house the way you want it. New homes also come with a warranty which you generally don’t get with an existing home.

Another advantage of buying a new home is that they are much more energy efficient than pre-owned homes which can save you money every month. Local and state building codes are upgraded each year and continue to increase the energy efficiency of new homes. The appliances and systems such as HVAC, plumbing and electrical are brand new and under warranty making the economic life of the home longer than a pre-owned house.

If you are considering buying a new home, it pays to get organized and use all the resources available to you in order to get a new home that you and your family will enjoy for years to come.

McKee Homes works with homebuyers to help them with financing, floor plan options and selections for their new home, as well as learning about the neighborhoods and communities where we build in Fayetteville, Pinehurst, Southern Pines and Aberdeen, Raleigh and Wilmington, NC.

When considering where to buy a new home, you’ll probably start your search online, but it’s also a good idea to make an appointment to walk finished homes to get a feel for which floor plans fit your needs and make you happy!  You can also see where the neighborhoods are located, how far your commute to work would be, and how close they are to stores, schools, churches, and other places that you frequent to make sure you will be happy living in that area. McKee homes offers a variety of floor plans with square footage ranging from around 1,500 sq. ft. to almost 4,000 sq. ft. with a variety of amenities so you can choose the community and area that best suits your lifestyle.

McKee Homes’ preferred lender is CMG Financial. CMG Financial provides excellent home financing services, and takes pride in educating our customers so you feel empowered to make knowledgeable and informed decisions regarding your financial future.

Options and Upgrades
McKee Homes offers presale agreements for customers who want to select options for their new home such as floor coverings, countertops, paint color, plumbing and electrical fixtures and other available options and upgrades. McKee Homes will work with you to make sure you are getting the new home that meets your family’s needs.

McKee Homes, North Carolina’s #1 Choice for New Homes

McKee Homes has highly skilled team members dedicated to creating the best home building and buying experience possible in Eastern North Carolina. Areas we are building in include: Fayetteville, Pinehurst, Southern Pines and Aberdeen, Raleigh and Wilmington NC. Save money and time with our preferred lender! Learn more at New Home Financing.