With home prices increasing the past couple years, many home owners now have more equity in their home. For those that may have bought in the last year or two, how do you build more equity? Here are some things to look at:
-Larger mortgage payments. If you can pay extra monthly, it will lower your principal balance and help you pay off your mortgage sooner. Typically an extra payment each year will cut about 6-8 years off your mortgage.
-Rising home prices. This is easy – as home prices go up, so does your value and that gains you more equity in your home!
-Refinancing to a shorter term mortgage. This can help you build equity as you will be paying off your home faster. However you will have the cost of the refinance – so for some it may make sense to just make larger payments. You want to look at your current interest rate, how long you plan to be in the home and see what makes the most sense for your situation.
-Home improvements. Updating your home or remodeling can increase your equity in your home. You want to make sure the money you spend to remodel will be worth it in the end, but in many cases, it will help you sell your home for more when you are ready to sell.
-Maintenance. Keeping your home property maintained will help you when you are ready to sell. Keep on top of general maintenance will pay off. Typically home buyers may ask for repairs but if you have been keeping your home in good shape, it will be harder for a buyer to ask you to repair anything.
-Curb appeal and staging. These both help you get more for your home when you sell. A fresh coat of paint and new plants outdoors can help your curb appeal.
Once you have created more equity in your home, then you can decide if you want to sell or maybe you just want to stay! If you do sell, then you will have more money to use to purchase your new home. Some people are still in homes that they purchased when the market was at its peak in the mid 2000’s. For those homeowners, they are now seeing equity after a few years of being upside down and may be able to get out of a home that is too small for them now – or maybe they just want to move to a different home.
Now is a great time to talk to a realtor or a loan officer and see what you can do!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
