How to Build Home Equity Like A Pro

How to Build Home Equity Like A Pro

How to Build Home Equity Like A Pro

Building your home equity is just as important as eating your vegetables. Making it a priority is one of the best ways to create your financial stability and increase your wealth.

You shouldn’t view your home’s equity as an abstract number that means nothing to you. It’s more like a savings account that can support you with expenses like paying for retirement, home improvements, or your children’s college tuition.

Want to happily watch your equity grow in leaps and bounds? Read on to find out how to build home equity like a pro.

Make A Larger Down Payment

Start building home equity before you even own your home by saving as much as possible for a down payment. Set yourself up with a savings app like Tip Yourself and transfer small amounts of money here and there while going about your day. Did you forgo that expensive cup of coffee? Add its price to your savings. Did you take your lunch to work? Transfer the cost of a restaurant meal to savings.

In addition to small savings, make some more difficult decisions. Postpone that big vacation to Hawaii for a couple of years and pop that money into your down payment fund. Drive your old, paid-for car another year or so and add those new car payments to savings.

Another way to make a larger down payment is to buy a less-expensive home. Even a house that’s a few thousand dollars cheaper than your original budget makes your down payment a bigger percentage of the total cost of your home. The result is a larger amount of equity.

Opt for A Shorter Mortgage

Automatically choosing a 30-year mortgage loan isn’t the best idea, especially if your goal is to increase your home equity fast. Talk to your loan originator about 15-year or even 10-year mortgage options. Depending on the type of loan and interest, a shorter term mortgage may not add much more (maybe less than $100 per month) to your monthly payments but will stockpile the equity in your home quickly. Look at a mortgage payment calculator to determine if you can handle the payments of a shorter-term loan and try to work it into your budget.

Pay Extra Toward Your Principle

Even if you chose a 30-year mortgage, you can still build equity in your home like a pro by paying a bit extra every month toward the principle. Doing this helps you build equity faster and saves lots of money on interest payments.

For example, if your payment is $1,000 a month on a $190,000 30-year mortgage at a 5% fixed rate, divide that by 12 months and you get $83. If your budget allows, pay this amount on top of your regular mortgage payment every month. This small extra payment over the course of a 30-year mortgage will build your equity faster, pay off your loan almost five years quicker, and save around $32,000 in interest! Paying extra on your mortgage loan is only one way to build equity. You can also…

…Increase Your Home’s Market Value

Homeowners who embark on smart renovations can increase their equity fast. Keep in mind, however, not every home improvement plan accomplishes this. Choose the right ones, such as a kitchen renovation, bathroom remodels or addition, or investing in energy efficiency. Avoid high-end investments in your kitchen and bath, and expensive landscaping if your goal is to build home equity. Those may look nice, but they do little to increase the home’s value.

Let Your Property Value Appreciate

The last way to build equity in your home is to have patience. This one may be the easiest way of all! Live your life, make your mortgage payments on time, keep up your home conscientiously, and watch the months click off the calendar. As time passes, property values tend to increase, which adds to your home’s equity.

You don’t have to use all these strategies to build equity in your home. Starting with just one of them makes a difference in the long term. Equity builds even faster when you commit to two or more of them. By decreasing your mortgage loan debt and increasing your home’s worth, with a few years thrown in, you’ll enjoy a hefty amount of home equity that will open doors to financial opportunities that make your life easier and less stressful.



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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:

  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020