Are you wondering how you can build home equity? Take a look at our 7 tips for doing so…
- When Home Prices Rise
This is an easy one. When home prices climb, you’re obviously gaining more equity because your property will now be worth more money.
- Reduce Your Mortgage Balance
Every time you make a mortgage payment you’re gaining more home equity. Every month, as you pay it off, you’re also paying off some interest and principal, which helps as well.
- Larger or Bi-Weekly Mortgage Payments
The larger or more frequent payment you make each month will help you pay off your mortgage and gain home equity at a much faster rate. If you increase the amount you’re paying per month, a portion of that will go towards the principal and help you pay off the mortgage quicker. You also have the option of doing a bi-weekly mortgage payment plan, which includes making 26 half payments during the year. In return, it shaves down your mortgage term, helps you to save interest, and builds you home equity faster.
- Shorter Mortgage Term
Maybe you started with a 30-year-fixed mortgage, but now feel like you can pay off your home at a faster rate. If so, you have the option of refinancing into a shorter-term mortgage with a lower mortgage rate like a 15-year-fixed. It will in fact increase your payment amount, but you can build your equity much faster.
- Don’t Refinance
This one goes against the last one, but if you don’t have to refinance or pull any cash out at all, this obviously helps you keep equity in your home.
- Maintain & Keep Up with Your Home & Improvements
It’s very important to maintain your home and to keep it in great shape for whenever you decide to sell. If your home needs some improvements and you’re able to make them and increase the value past whatever you spent, then you’re in great shape. When listing your home, it’s also not a bad idea to do some staging. Yes, it costs money, but you’ll also find that a few simple fixes can go a long way. Improvements to consider include ripping up carpets, painting walls, and getting professional landscaping done.
- Rent Out Your Property
If you have the option to do so, renting out part or all of your property is a great way of building equity if the rent you receive from tenants each month helps cover your monthly mortgage payment.
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Have questions? Wondering what kind of home loan is right for you? Want to know how much of a loan you can qualify for? We’re here to help! Contact us today with your mortgage-related questions, or to receive an actual quote.