For many homeowners, building equity in their homes is the ultimate goal. Equity is the difference between the value of the home and what the owner owes on any mortgage loans, and having it is the only way to ensure a property is a true investment.
Equity is “built” by increasing that difference between the current value and what you have left to pay off on your mortgage. Some factors are out of your control; your equity will increase or decrease based on the housing market as a whole, for example. But you can take action yourself to build equity in your home without waiting for home values in general to rise.
Pay Off Your Mortgage Earlier
The easiest way to build equity in a property is to simply pay off the mortgage ahead of schedule. Remember the definition of equity: it’s the difference between what your home is worth and what you owe. Your equity automatically increases when you owe less.
If you can afford extra mortgage payments, check with your home loan provider before paying ahead of schedule. Some lenders will assess fees and penalties for making extra payments. Also, be sure your payment is going towards your principle, and not the interest.
Keep Up with Regular Maintenance
Homes need a lot of tender loving care on a regular basis. Keep up with both indoor and outdoor maintenance to ensure your living space retains its current equity. Focusing on curb appeal by doing things like planting flower beds, keeping the yard neat, and cleaning driveways and walkways will help boost the overall equity in your property.
If it’s time to replace some appliances, put in new, energy-efficient models to increase equity and save on your utility bills. Depending on your location, you might also qualify for tax credits or grants for going green. You can use any rebates you may receive to continue building equity by paying off an extra chunk of the mortgage or reinvesting in your home, in the form of the next tip:
Make Home Improvements
Creating a comfortable, enjoyable living space makes your home more appealing – and therefore helps the value go up. Taking on some DIY projects to improve your home is a really easy way to build equity in your home.
Kitchen upgrades tend to help increase the overall value of a home because they are desirable. You don’t need to spend thousands of dollars on an entire renovation. Focus on the little details that make a big impact: put in a new sink, replace old cabinet hardware with modern handles and drawer pulls, and exchange that old fluorescent light for a more attractive fixture.
Bathrooms are also great areas to focus your home improvement efforts. Replace old flooring with new tile, change up the fixtures, and replace any crazy wallpaper with a coat of fresh paint.
Additional ideas include putting down new flooring in any area of the house where it’s needed, painting rooms (and ceilings and trim), replacing old door knobs and handles, and installing features like crown molding or board and batten. Remember, the key to a successful home improvement project that builds equity in your property is one where the cost does not exceed the value added.
Building equity in your home can be done in a variety of ways. Don’t get stuck relying only on the market to help drive your home value up and increase the difference between what your house is worth versus what you owe. Choose one of these easy ways to build value into your home that works for you and start building equity today.
Union Mortgage has some of the lowest mortgage rates. Apply today and find out how much you could be saving on time and money.
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