4 Tried-and-True Tips for Building Equity in Your Home

By Fran Campbell - June 11, 2020

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. 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 at the Lake of the Ozarks or to fund your retirement. So, how do you build equity in your home? Here are a few tried-and-true strategies.

1. 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 principal (not your interest).

2. 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 consider 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 you to pay off your loan sooner and save a great deal of money on interest in the process.

3. 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.

4. 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 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

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!

When you're ready to either buy or sell, be sure to reach out to the Fran Campbell Team. For more real estate related guidance, contact the Fran Campbell Team, the best real estate team at the Lake of the Ozarks to help you through the buying or selling process!

Contact the Fran Campbell Team to get your home SOLD!