5 Smart Ways to Build Home Equity
How much of the house you own is your home equity. It’s a financial asset that you can employ in tough economic times, for significant home remodeling and even for investing.So how do you build equity? Here are five ways you can go about it.
Larger Down Payment A larger down payment is the simplest and most basic way to increase your home equity. The more your down payment is, the more your financial stake in the house is, right from the beginning.
Wait for Value Appreciation Value appreciation is the most significant factor in improving your home equity, and frustratingly the one you can do very little about. Home equity is simply calculated by subtracting your home’s value by the amount you owe.
Lessen your Mortgage Years Your home equity increases in proportion to your mortgage payment. The more and faster you pay your mortgage, the higher your home equity will get. If you refinance your mortgage from a 30-year plan to 20 or 15 years, your home equity will start to build much faster.
Pay More Now to Pay Less Later Even if you don’t go for a complete refinancing, you can make some other contributions to pay off your mortgage early.
Remodeling Unlike value appreciation of the market, which you can’t contribute to, remodeling and renovating is something you can do to add value to your home.
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