How to Build Equity in Your New Home
May 17, 2018 |
Equity is the amount of your home that you actually own. There are two ways to build equity: property value increases, and/or the number of debt decreases.
Increase Property Value:
If you can increase the value of your home your equity instantly rises. If you’re lucky, this can be done without you doing anything. The home values in your neighborhood may increase as your neighborhood or city becomes more attractive. No effort has
to be made on your part! But, for the not so lucky ones, increasing your property value will involve investing in repairs and upgrades. Be warned: not all repairs and upgrades give you a return on investment, let alone a positive cash flow. Make sure
to calculate the costs of any renovations you are considering to see if you will be able to recoup those costs in the future. Everyday upkeep can prevent some renovations that need to be done, so don’t put off keeping a clean home!
You can increase your equity with every payment you make towards your home. A larger down payment will give you more equity up front. Shorter term loans will also cause you to pay down debt and build up equity more quickly. A bonus to shorter-term loans
they are usually accompanied by lower interest rates – which means you’ll spend less on interest over the life of your loan. Every extra dollar spent towards your mortgage reduces your debt and goes towards equity. Not sure what you want to spend your
Alaska Dividend Fund or Tax Refund on? How about paying off more of your home and increasing your equity.