Home equity refers to how much of your home’s value you actually own, as opposed to how much the bank owns. Building more home equity is one of the best ways to grow your personal wealth and remain financially stable. You’ll naturally increase your home equity just by making your monthly mortgage payments, but there are a few ways to speed up the process.
Add Value
Homes that are built in desirable areas will inherently appreciate in value over time, but if you really want to increase value, a renovation project is a great idea. Redoing the bathroom or kitchen can add a ton of extra value to your home, and the best part is that you own all that newly created equity. When done correctly, spending $5,000 on a renovation project can add $10,000 in value over time.
Down Payment
This might sound obvious, but the bigger down payment you make, the more equity you’ll have. Saving up for a bigger down payment will also keep your mortgage payments to a lower and more manageable level, so do your best to save up!
13 Payments
Instead of making payments once a month, make them every two weeks. This will add up to 13 payments a year, which can pay off a 30-year note five to six years faster. It’s best to talk this idea over with your lender first so they know what you’re doing.
Just Throw Money at It
Next time you get an expected bonus or cash gift, put it toward your mortgage. It’s not a super exciting option, but it will help you build your home equity.