Home, Land, Property Buying and Selling - Yet another question - Explain Equity please

This has been suggested to me more than a few times by family and friends.....is that I just go out and buy the land that I want, as of right now, if I got approved for the loan, I could afford the around $350 a month payment if I got the land on a 30 yr loan.

But to me that would be pointless if I could not eventually afford to put a house on it(thinking the house I *want* to put on it will cost about 110,000). As mentioned in my other thread a mobile home would be much cheaper if needed.

So how does equity work? It seems to me if you can't afford the 65,000 land now, on top of the 110,00 for the house, why would you be able to in the near future, say after making 2 yrs worth or payment on the land?

If all you can afford is $350 a month I would not reccomend doing this. Your payment on the $65G land alone will be in the $500 dollar range.

then even if you were to build enough equity to get a lone against the property and build a home then you's got the payment for that also. You'll be extremly house poor.

If all you can afford is $350 a month I would not reccomend doing this. Your payment on the $65G land alone will be in the $500 dollar range.

then even if you were to build enough equity to get a lone against the property and build a home then you's got the payment for that also. You'll be extremly house poor.


I guess I should have just posted this in my previous thread, lol.

Here's the deal:
http://forum.doityourself.com/showthread.php?t=331313

and yes it would be more int he $500 range, I'm just going with the calculator on the land for sale's web page that gave me $350 as an estimate.

I make $1200 a month right now, and have no payments other than gas and cell phone.

I've never hoped to be more than a pay check to pay checker, as everyone I know, and my entire family is the same. :)

A simple explanation of equity as I understand it with no consideration of your particular situation.

Equity is the value of your property minus what you owe on it. For example if you own a property worth $65K and you have a mortgage for $50k then you have $10k equity. Your equity can go up in two ways. First you keep paying so you owe less. Second the value of the propery goes up over time. So after 10 years the propery is worth $75k and you only owe 40k. Now you have equity of $35k but have only paid $10k+interest in mortgage.

I'm a conservative spender, but I won't leverage land to build a structure unless the land is owned free and clear.