Homeowners should make building their equity a top priority. Having equity in your home is like a savings account. You can take out a loan from your equity for a number of reasons – like for emergencies, to upgrade, or to pay college tuition. Keep in mind, too, that as you build equity in your home, you’re that much closer to outright owning your home.
There’s a number of things you can do to build equity which include: making additional principal payments, choosing a shorter mortgage period, making a larger down payment, and making home improvements.
Build Home Equity
Your larger down payment is sensible for two reasons. First, you’ll have a smaller monthly payment. Second, every dollar you put on your down payment is applied directly to your principle (your equity). For this reason, saving for a larger down payment has a number of advantages. For starters, it automatically increases your equity. What this means to you is that you’re borrowing less on the home which means less interest. Make every effort to make a large down payment if there’s any possible way for you to do so.
Next, you might consider making larger principal payments. Every dollar paid on the principal is another dollar towards your equity and less money to accrue interest. Therefore, even if you can only add a few extra dollars to your monthly mortgage, make it a plan to do so monthly. In the end, you’ll see that it pays off.
And Then … You Can Choose A Short Term Mortgage
Another avenue some take is to have a short mortgage term rather than a long one. By doing this you do several things. First, you pay more money per month on your loan, but you will have less money accrued in interest and build equity significantly faster. Also, with a short loan period, you’ll save a considerable amount of money that would be accrued in interest. In the end, you’ll have the peace of mind of knowing that you own your home much faster.
Another way to build on your equity is by making home improvements. This builds equity because you increase the value of your home when you make improvements. This means more equity to you. Keep in mind, though, that not all improvement are created equal. For example, home improvements to kitchens and bathrooms always increase the value of your home more so than external improvements like swimming pools or fences.
If you are interested in building home equity, then make a plan that includes the foregoing tips and follow that plan diligently. This will increase the equity in your home quickly and efficiently.
If you plan to sell in the Ellenton area, please get in touch with me. I’d be happy to let you know what homes like yours are selling for.