Once you know what equity is and how you can use it, the next step is figuring out how to build it so you can take advantage of its perks. Since equity is the percentage of your home that you own, building equity means increasing cash resources that are available to you.
1. Make a Large Down Payment
Putting more money down in the beginning is a good way to get a head start on building home equity. Plus, if you put down 20% or more, you can avoid having to take out private mortgage insurance.
2. Pay Extra on Your Mortgage
When you pay more than your regular payment on your mortgage, you can increase your home equity as long as your extra money is going toward the principal. Ask your mortgage servicer how to apply the extra payment so it’s covering the principal. This way, you can be sure you’re increasing your home equity.
3. Make Improvements that Increase the Property Value
You can boost your home equity by renovating, remodeling, or making improvements on the home. When you make improvements that increase property value, you also increase your home equity. Consult with a home professional before you do any renovations so you have a good idea of which type of project should get you the best return.
While building equity is a process that takes time, it can be beneficial in the long run. The faster you can grow your home equity, the quicker you can enjoy the benefits. Whether you consider putting down more money in the beginning, paying a little extra toward your mortgage, or making renovations that increase your property value, these are all great ways to boost your home equity.
To learn more about how you can build home equity or how we can help you achieve your specific financing goals, contact us today. Our Loan Originators are happy to answer all your questions!