Fast Track Your Home Equity
For so many first time homeowners, purchasing a home is an exciting time. It’s a chance to dream and create the perfect shelter, a chance to put down roots in your chosen neighborhood and build up a life. If you’ve never owned a home before, there are several confusing things to homeownership, mainly, what is home equity and why is it so important?
What is Home Equity?
Simply put, home equity is the homeowner’s interest in the home itself. You have the chance to increase this over time, as the property value of your home increases, or you pay the mortgage loan down over time.
Equity can be a confusing concept, but in the most basic sense, your home’s equity is the portion of your home that you—not the bank, lenders, or others with interest in the home—own.
If you want to figure out how much equity your house currently has, you can deduct the initial purchase price of your home, you can assume that the percentage you’ve put down on your home is around the same amount as your interest in home equity.
Why Does It Matter?
Your home’s equity is a valuable asset to you as a homeowner. It may be the most valuable asset if you look at homeownership as a whole.
You can tap into your home’s equity to make renovations, use it to open a line of home equity credit, and home equity loan.
How Do You Build It Up?
If you want to speed up your home equity quickly, there are two primary things you need to know: you can pay off your mortgage debt faster, or increase your home’s value.
Some homeowners focus on one or the other, but if you have the option to work in balance toward both, you’re on your way to building equity in no time.
While some homeowners might see their first home as a place they plan to spend a large portion of their lifetime, many first time owners see their first home as a starter, a place to call home for the moment while saving for something a little grander.
Whichever camp you’re currently in, building equity is important. However, if you’re in the latter, building equity quickly can help you get ready to put your home on the market as soon as the market is on the rise.
How to Build Equity Quickly
- Make Improvement to Your Home. If you already have renovations or remodels in mind for your home, great. You’ll be boosting your home’s equity without even trying. Of course, be cautious of what you’re spending your money on when it comes to home improvements. Some investments are better than others. You won’t always want to focus on the “quick and inexpensive” fixes, but it can be beneficial to start small at first. Just by giving the interior and exterior of your home a fresh coat of paint, replacing your front door, and updating lighting fixtures, you’re already boosting your home’s value by quite a bit.
- Boost Your Curb Appeal. As with all other effective home improvements, it just takes a bit of research into current home design trends to see what’s selling and what’s not. The curb appeal of your home is highly important. It’s the first thing a potential future buyer will see, after all. However, there are some outdated ways to enhance your home’s outward appearance. When enhancing your curb appeal, think about what will attract buyers at first glance, choosing plants, designs, and grass that works well in your climate.
- Budget Your Income & Pay Off Your Mortgage Faster. It’s not only just a good practice to have money saved for emergencies, and to smartly pay off acquired debts, but adding an extra sum to your monthly payments, adding an extra twelfth of your typical payment per month for a year, or making a payment twice a month can all make a difference in your continued equity.
Category: Housing
