Gaining equity in your home is a solid way to provide yourself options for the future. Equity can provide a large nest egg or provide cash for a large down payment towards a different home Your home is the biggest investment you will have in your life. It’s important to maintain that investment and do all you can to ensure you are gaining equity.
There are steps that you can take to help gain equity in your home. It’s true the current economic conditions do play a major role in how quickly a home appreciates, however, here are four things you can do to help with gaining equity in your home.
Improvements to your home can add a significant amount of value. There are numerous minor home projects that you can complete that can add value without breaking the bank. Numerous home advisors’ state that a minor kitchen remodel often times yields the highest return on investment. Updating the countertops, installing new appliances and refinishing the cabinets are all ways to gain equity without spending a ton of money. Other home improvements that add value to the home are:
- A bathroom makeover
- A bedroom addition
- Replacing garage doors
- Installing hardwood floors over carpet
- Outdoor Landscaping
Choose a 15-year mortgage:
When buying or refinancing your house, you may want to take a look at a 15-year mortgage. Often times home-buyers falsely believe that a 15-year mortgage will double the payment, many times that is not true. Ask your mortgage lender to run the numbers on a 15-year mortgage vs a 30-year mortgage, you can compare the costs and see which is a better fit. If you are able to handle the extra money for a 15-year mortgage payment, you will pay your mortgage off quicker; and in turn gain equity in your home.
Pay more towards your principal:
If choosing a 15-year mortgage is not financially possible, making extra payments toward your principal is another way to gain equity. Paying down your home loan quicker is a sure fire way to gain equity. By making one extra principal payment every year, you can potentially pay off your home loan seven or eight years before schedule!
If you are unable to send off an extra principle payment, adding an extra $100 or $200 to your payment will also help pay down your loan. If you find you are able to pay more money towards your loan or make an extra principal payment, you will absolutely gain equity in your home.
Make a larger down payment:
Purchasing a home with a low down payment is often times very tempting and attainable. However, if you are able to make a larger down payment you have already begun adding equity to your home. If you want to build equity faster, putting down the traditional 20% down payment will set you on the right track.
Hopefully, these four tips will help when looking for ways to gain equity in your home. It’s always important to plan for the future and take a proactive approach when dealing with your money and investments.