How to Properly Build Home Equity
For those who are still learning about what it takes to own a home, home equity is the portion of your home that you already own, or the percentage of your home value that has already been paid off. Many people struggle with the task of building their home equity without breaking the bank. Here are some tips on how you can get home equity, and then work on building it:
- Let home appreciation take its course. This can be a short or long process, depending on how the market is during that specific time. The bigger your down payment, the larger your equity becomes.
- Add additional payments to your mortgage (if you can). Try to make bi-weekly payments on your mortgage, versus just paying once a month. This will allow for a lower balance on what you owe overall!
- Cut your loan term in half. Although this will allow for larger payments, you will pay it off sooner and thank yourself in the long run.
When it comes to home improvements, they build equity, but only large home improvements like total renovations will make a dent. Large home improvements can include a total renovation and upgrade of a kitchen or bathroom, new flooring, or all new appliances. The more your home is worth, the larger your equity can become.
Ultimately, you can build your equity by making larger and/or more recurring payments on your home and working to upgrade and modernize each room within your home!