Increase Your Home Equity with these Simple Tips

By Fran Campbell - June 26, 2018

Building equity in your home is incredibly important and valuable. Simply put, "equity" is the amount of home you actually own. In order words, it is the difference between your home's actual market value and the outstanding loans you still have against the property. For example, if your home is worth $200,000 and your mortgage loan still has an outstanding balance of $160,000, you have $40,000 of equity in your home.

Home equity is a valuable asset to have for many reasons. If you are short on cash, you can use it to take out a home equity loan. This is a loan against the amount of property you actually own. (To go with our previous example, this would be $40,000.) You can also use the equity in your home to put towards the down payment on your new home or to fund your retirement.

So, how do you go about building equity in your home? Here are a few tried-and-true strategies.

1. Shorten Your Mortgage Term
If you're looking for ways to pay off your home loan sooner and consequently build home equity faster, it may be time to reconsider refinancing. Refinancing will allow you to shorten your mortgage term (and potentially score a lower interest rate). Shorter terms mean less interest paid overall, which means more equity for you. You can also look into changing your payment plan to accommodate biweekly payments, which will enable to pay off your loan sooner and save a great deal of money on interest in the process.

2. Make Larger Mortgage Payments
If your loan doesn't have any prepayment penalties and if you have the funds to do it, it's a great idea to throw extra money at your mortgage payment every month. This will pay off your mortgage loan faster as well as increase the amount of your home you actually own. If you decide to put extra money towards your payment, though, be sure to specify that your extra money goes towards your principle (not your interest).

3. Increase Your Home's Value

The outstanding balance on your mortgage loan is only part of the puzzle - the other important factor is your home's actual market value. Increasing your home's value, then, is a clever way to build equity in your home. Here are some simple but effective ways to increase the value of your home.

Enhance Your Curb Appeal
Upgrade Your Appliances
Remodel Your Bathroom
Repaint Your Home

4. Stay On Top Of Home Maintenance
Time causes natural wear and tear on any home - every homeowner can attest to that. The key is to stay on top of these minor issues and fix them before they have a chance to become big problems. Small issues are much cheaper to fix, and a home that is well-maintained is worth a lot more. Not only will your home be more pleasant to live in while you're there; you will be able to sell your home for more when the time comes.

Want More Suggestions? Contact Fran Campbell Team!
Having home equity gives you a major financial advantage. If you'd like other suggestions for increasing the equity in your home, come talk to our team of the best real estate agents at the Lake of the Ozarks. We are here for you!

Contact the Fran Campbell Team for your real estate needs!