How do you build home equity?
- Make improvements to the property
- Pay a higher mortgage
- Make a large downpayment
- Maintain property upkeep
- Rising property prices
Every first-home buyer and existing property owner has some idea on how to build home equity. Simply put, home equity refers to the portion of the property that is owned by a homeowner. Home equity value can potentially increase if there is an increase in property value, or if mortgage loans are paid down.
For example, someone eyeing a house and lot for sale in Corinthian Gardens would first have to obtain a clear grasp of the value of the downpayment they have to make before purchasing the property. They would also need to have some understanding of several factors that may contribute to property market windfalls which can drastically change the value of the home.
If you’re someone who’s keen on understanding the various factors which contribute to building home equity, then this simple guide aims to provide you with some tips on just how you can achieve just that.
Make improvements to the property
One of the ways you can build your home equity is by embarking on home improvement projects. You can make several architectural additions to your home which would improve the house’s aesthetic appeal.
For example, if you’ve just purchased a home and you’re not entirely satisfied with the structuring of the kitchen, you can have it totally rebuilt and apply the design that you’ve planned. Some of the changes you can make include adding more modern-looking cupboards, switching from a gas stove to an electric stove, or even extending that portion of your home.
One thing to keep in mind with renovations is that you should always be aware of how much it would cost you to undergo property changes. It would be in you and your property’s best interest to invest your money into something which can ultimately benefit you in the future.
Pay higher mortgages
While this next portion does not necessarily drastically alter the value of your house, it can contribute to you being able to build your home equity much more efficiently. Having said that, one of the ways for you to build your home equity faster is by making larger mortgage payments.
Simply put, mortgages are loans which aspiring property owners borrow from the bank. These loans have to be partially repaid over a set time period until the lender receives the payment in full.
By paying more than your usual mortgage payment, you’re contributing to building your home equity faster. You don’t have to add too much to your scheduled payments. Just ensure that the value can significantly contribute to you paying off the mortgage faster.
Make a large downpayment
Another way by which you can improve your home’s equity is something that can be done even before you purchase the property.
Anyone planning to buy a house inside a subdivision, for example, would see that it’s in their best interest to make a larger downpayment on the property. By making this transaction, they’re able to own a larger portion of the house just from the get-go.
Doing this will have positive trickle-down effects in terms of repaying the house in full. Not only would you be able to lower the value of your scheduled repayments, but you would also be able to reduce your loan at a faster time.
Maintain property upkeep
Similar to making larger mortgage repayments or larger down payments, another simple way by which you can build your home equity is by constantly subjecting your house to maintenance checks.
Before purchasing a home, ensure that there are no irreparable damages to the house. Make sure every aspect of the house is in order.
Once you’ve acquired the property, some of the best practices you could do with regards to its maintenance include keeping the piping and electricity systems intact as well as ensuring the flooring and the walls are also in good condition.
Rising property prices
Finally, another way of building your home equity is simply by following the trend of rising property prices.
Over time, the value of your home may naturally appreciate. If your house is surrounded by a growing urban scene, several rising establishments popping around your area can also contribute to the value of your property increasing.
However, you cannot totally rely on this, because the property market is unpredictable. Instead of the value of your home appreciating, it may experience a downfall in price.
Key Takeaway
The guide above has presented you with just some of the best property investment practices you can apply when purchasing a house. If you still want to know some of the other practices on how to build home equity, then conducting your research is always your safest bet.
You may simultaneously apply the tips presented by the guide above in order for you to build your home equity faster.
If you want to know more about building home equity, click the button below to get in touch with your favorite licensed real estate brokers!