4 Great Ways to Build Equity in Your New HomeReturn to Blog
Congrats on investing in a new home! Now you may be wondering how do you increase its worth? One way to increase the value is by building equity. Equity is the market value of your home or property, minus your outstanding mortgage debt. Building equity is one of the most important financial benefits of ownership.
If you live in a market where home values are rising, your home may increase with the rising demand, and your equity will increase without doing anything. On the other hand, you can work on growing your home’s value by decreasing the amount you owe and increasing the value of your property.
Part of every mortgage payment goes towards paying off your loan’s principal and interest, with most of the amount going to interest costs in the loan’s early years. If you pay the principal fees sooner, your equity should increase faster. Here are a variety of ways to build your home equity quicker:
1. Paying more:
an excellent way to use your tax refund, for example, to pay more and make sure your lender applies it to your principal. If you have a 30-year mortgage, paying higher rates of your mortgage can help you build equity.
2. Paying faster:
You could divide your monthly mortgage payment into two bi-weekly payments, for a total of 26. But make sure to check with your lender first to make sure they accept bi-weekly payments. Reputable lenders will not charge a fee for bi-weekly payments.
If you have a 30-year mortgage, you might want to consider refinancing to a 15-year loan, which has a lower rate. Factor in any closing costs before making this move. It’s not common, but it’s better to check.
Before you decide on any of these options, consider if it’s the best use of your money. If you have not reached a cap on employer-matched saving accounts, perhaps you should be putting extra money into your 401k rather than paying off a low-interest mortgage.
4. Renovate wisely:
Making smart improvements and adding the right amenities to your home can also increase its market value, which means more equity for you. Popular features can vary by area and home type, so consider what’s in demand in your market. Also, be mindful of your market as you’re thinking about how much to invest in improving your home. The realities of a buyer or seller market will have an impact on how much return you’ll get when you sell.
If you have any questions about buying and selling or building equity for your new home or investment property, please call or text Darryl Glass at (510) 500-7531, email firstname.lastname@example.org, or if more convenient, you can schedule a call or virtual meeting with Darryl below: