Five Tips for Boosting Your Home's Equity
The easiest way to build equity in your home is to pay down your mortgage. Equity is the amount of money that remains when the amount owed on the mortgage is subtracted from the value of the house. If your home is worth more than the money you owe, then you have equity. Equity is an excellent financial tool and even a nest egg, so the faster you can build equity in your home, the better.
Did you know, however, that the biggest share of home equity loan dollars is returned in to the home through home improvements and maintenance projects? Many homeowners can increase their equity by improving their home. Considering the benefits and the ease of leveraging the equity you already have through a second mortgage or mortgage refinancing, this is hardly a surprise. If you make smart decisions about building equity you can earn it even faster and with less investment.
Here are the top five ways to put more equity in your home:
Location Location Location
The most important consideration you should make when buying a home is the location of the property. Buying a home in a desirable neighborhood is critical. If the real estate values are rising your equity will increase just by holding on to the property. As the neighborhood becomes more attractive to buyers, the value of your home will increase. This is especially true of neighborhoods that include many homes in renovation. As the houses around you become more appealing, your house will look all the better to a potential buyer.
Improve Curb Appeal
Curb appeal is the easiest and most important means to raising a home's value. It doesn't cost a fortune to install irrigation and landscape a property, but the first impression from the outside can be worth more than you spend. You will spend less money and time maintaining your home's good looks and potential buyers will see this value as well. The more potential buyers are willing to spend on your home, the more equity you have.
Remodel the Kitchen, Bathroom or Master Bedroom
Remodeling an old kitchen is an excellent idea if you really want to increase the value of a home. Buyers are willing to pay more for a home with a newer cook-friendly kitchen. Master bedroom and bathroom improvements are also an excellent way to increase equity. Just take care when you work on a remodel that you don't spend an exorbitant amount of money. Tasteful but less expensive changes are more likely to be worth the investment.
Don't overlook the importance of small improvements you can make with "sweat equity." Do-it-yourself upgrades, such as painting, wall papering and other simple decor changes can really make a difference. Also, don't underestimate the value of a good cleaning (especially those carpets). Small efforts tend to cost reasonable amounts of money. This is a great way to increase the value of your home without having to finance an expensive remodel.
Pay it Off Quicker
Off course the simplest way to increase equity in your home is to pay off your mortgage as quickly as possible. This is the reason that many borrowers increase the monthly payments to pay off their mortgage before their maximize amortization. The payments are larger but you build equity at a much faster rate.
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