Anyone who owns a home knows the importance of building home equity. Equity is your home’s current fair market value minus your mortgage and other debts attached to your home. The more home equity you have, the more money you receive when you decide to sell. On top of that, you can use your home equity to secure a large loan or borrow money in some other capacity. You can then use your home equity to purchase another property and rent it as an income property. These reasons are why a homeowner should be doing everything in their power to build home equity over time. With that in mind, below you can find five easy and efficient ways to build home equity, brought to you by San Diego REALTORS® Mary Beth Kellee & Philip Fredricksen.
1. Make a Larger Down Payment
If you can afford it, opt to make a larger down payment when you purchase your home. Not only will this give you a larger percentage of home equity right off the bat, but it also will allow you to negotiate a shorter mortgage plan. However, if you require a few years to save up for a larger down payment, it is likely a better solution to purchase a home ASAP with a smaller down payment, as this will allow you to benefit from the home’s appreciation in value.
2. Benefit From Home Appreciation
It is a good time to own a home. The value of houses in San Diego County are skyrocketing, rewarding those who invested in a down market a few years ago with appreciating home values. When the market value for the home appreciates, the equity of the homeowner goes up without them investing even a single additional cent. Equity takes into account the rising value of the home on the open market, helping you get an increased share of the home.
3. Make Mortgage Payments Every Four Weeks
Most mortgage payments are made on a monthly basis. One shortcut that won’t break the bank is making a mortgage payment every four weeks instead of once a month. Since 52 divided by 4 is 13, not 12, over the course of an entire year that will add one additional monthly payment. While this may seem like no big deal in the short term, over time this can shave years off your mortgage and help you increase your home equity at a faster rate.
4. Spruce Up Your Home
Taking on big home improvement projects not only makes your home a more comfortable place to live, it will also increase your home equity. Home improvements such as a new kitchen or adding a bathroom will increase the valuation of your home, which will, in turn, increase your home equity.
5. Invest Big Financial Gains In Your Home
Every once in a while you may find yourself lucky enough to have a large sum of money come your way. This could be a generous gift, a big bonus at work, or a family inheritance. The best thing you can do with this financial gain is to use it to pay down your mortgage. If your lender allows it, put a large lump sum of your newfound cash into your mortgage and then try to renegotiate your future monthly payments.
Home Equity Advice From REALTOR® Team Fredricksen & Kellee
While all of these home equity tips can help, the best advice is to talk to an experienced and talented real estate agent. Philip Fredricksen and Mary Beth Kellee are a top REALTOR® team in San Diego that can offer you expert advice on how to get a large home equity share, as well as guide you through the complicated process of purchasing a home. If you are interested in buying or selling a home in San Diego, contact Philip Fredricksen and Mary Beth Kellee today.