Dashboard › Forums › 7. Choose your winner › One has more equity and one has more cost – which is better? › Reply To: One has more equity and one has more cost – which is better?
The more equity you build with a loan, the more you are paying down the loan, which means more of the home you own as opposed to the bank owning. In this way, building equity is building your net worth. A loan that builds less equity typically means that more of your payment is going to paying interest to the bank instead of building your net worth through owning more of your home. You should think of it as selecting the loan that builds the most equity that you can also afford the monthly payments for. That would be the best long term strategy. If equity is confusing (and it is to most home buyers and homeowners), watch our bonus video on Equity in the Bonus section. Happy to answer any more questions if any of the above answer is confusing.