The reality is that building your home equity protects you from becoming upside down in your mortgage. It allows you to easily obtain credit if you intend to put a down payment on another house or obtain a loan.
Equity is the difference between the market value and the outstanding mortgage balance. As you keep paying the installments your home equity continues to increase. Home equity loans may be easy to get if you fulfill the eligibility criteria. Home equity is built over time using either amortization, appreciation, or a combination of the two. Lenders are at your disposal to help you make the best decision.
6 Home Equity Fast Track Tips
⤴️ Let your home appreciate
Appreciation is an increase in price or value of properties.
People normally talk about how the value of their house has appreciated or what is the value of their current home.
If you buy at the right time and in the right location, there is also a very good chance that you will build home equity by means of appreciation.
When your home appreciates, it means that the actual market value of the property has increased since the time you initially purchased it.
A property in good condition in a great area will see more equity opportunity than a run-down property in a depressed area in the short term.
You get a better return on investment in the more stable neighborhood and stand a better chance to scoop up some appreciation just for buying in the right place.
On the other hand, it may be quite some time before you are able to find a suitable buyer for an expensive property you buy without considering the potential for appreciation.
A homeowner must maximize his house value or may sell his house cheap on the consideration that it has not been well maintained.
You, as a real estate investor, should know better that it is the land it is sitting upon is what is more important.
💰 Make a larger down payment
If you want to build home equity as quickly as possible, you can increase your down payment or pay more than the required amount on your mortgage payments.
Doing this will also lower the amount of Private Mortgage Insurance you have to pay in the event that you do not make a down payment of at least 20% of the purchase price of the home.
📉 Use Financial Windfalls
The interest rate on a home loan is usually significantly lower than the other types of credit.
Helping you to save on interest charges and pay the debt off sooner.
To easily pay down your mortgage you can use, work bonuses, family gifts and inheritances.
If you consolidate your mortgage in lump sums, make sure your payments are recalculated based on new, lower balance.
This will help build your home equity.
💵 Make Biweekly Payments
A home loan is set up in such a way that the loan should be paid off entirely over the course of the period of the loan.
The amount of principal that you owe will go down with every monthly mortgage payment you make.
You can switch from monthly mortgage payments to biweekly payments to build equity faster.
this mortgage payment frequency, you will add up to 13 monthly payments instead of 12, over the course of the year.
You only need to ensure your lender maintain the charges for processing semimonthly payments.
✂️ Cut Your Loan Term in Half
Each payment you make also brings your mortgage closer to amortization, which increases the amount of equity that you have in your home.
Paying your mortgage in 15-years instead of 30 years will build your home equity two times faster.
Monthly payments are significantly higher.
The big benefit is that the property will pay off more quickly and when it does you will have all of the equity in the home at your disposal.
🏚️ Make Home Improvements
Home repair or renovation projects can be extremely rewarding both in terms of personal satisfaction and financially as the resale value of your house goes up.
Renovating can help you build up significant home equity in the property quickly, which allows you to do many things like, purchase more property.