Building equity in your home will help give you something back when you go to sell your home. It's the amount of money you have between the amount you purchased your home for and the amount you actually owe. Having equity in your home helps you if you need to borrow this money in the event of an emergency, or need to take out a home equity loan to do upgrades on your home. See below for helpful tips so you can gain equity in your home.
Pay More On Your Mortgage
Paying more towards your monthly mortgage payment helps build equity, as you are paying more money towards the principle amount meaning anything extra will be deducted directly off of what you owe on your mortgage amount. If you aren't able to pay much more, that's OK, anything will help.
Refinance For A Lower Interest Rate
Refinance your loan for a lower interest rate. This will help lower your mortgage interest, meaning you won't be paying as much towards the interest payment. Refinancing can free up money for you to pay more towards the principle amount (or to pay off other bills first).
Refinance To Lessen The Term
Refinancing can also allow you to lessen the length of the term of your loan. This will allow you to add equity to your home at a quicker pace. If you have a 30 year loan, opt instead for a 15 year loan. You may be paying a little more money for this type of loan each month, but you'll add equity faster.
Add To The Value Of Your Home
Adding to the value of your home by doing some home improvements will help give you more equity. If your home is worth more, you'll have more home equity. Home improvements do not always give you the value you want, especially if you live in a neighborhood that may not be quite up to par. Talk to a local realtor about rising home values and what other homes in your area are selling for before you spend the money on home improvements.
Having equity in your home is important. It means you could get an actual check when you sell your home, and could also mean that you could borrow against that home equity if you need to take out a home equity loan for improvements to your house. It's a good feeling to have that money, so speak with a lender if you need more help with home equity.