5 Ways to Grow Home Equity

One of the many benefits of homeownership is the ability to grow a tremendous amount of equity over time. The equity is the difference between the home’s value and the outstanding mortgage balance. While home equity generally grows for many homeowners because of a variety of factors, it is possible to have negative equity. With this in mind, you understandably need to know how equity grows and how you can potentially increase home equity through specific actions.

1. Increasing Home Value
Property value can increase or decrease over short periods of time, but it will generally increase overall. With this in mind, you may be able to increase home equity by retaining ownership for a longer time period.

2. Decreasing Mortgage Balance
You are required to make regular mortgage payments, and these payments will result in a gradual reduction in your loan balance. The combination of increasing value and decreasing mortgage debt can build a significant amount of equity, but there are some extra steps that you can take to boost equity further.

3. Extra Mortgage Payments
There are several ways to pay down the mortgage balance at a faster rate. For example, you could pay a little more on your regular payments, or you could set up biweekly payments. You could also use refunds, bonuses and other sources of extra cash to pay down your mortgage debt further.

4. A Shorter Loan Term
Applying for a 30-year mortgage is common because it establishes the lowest mortgage payment possible in most cases. However, depending on the loan program, you may also be able to apply for a 15-year or 20-year mortgage. Your payment will be higher with a shorter term, but the debt balance will decline at a much faster rate.

5. Improving Home Condition
Your home’s condition directly affects its value. Both regular property maintenance and thoughtful improvements will have a positive impact on value. Because the amount of the improvements’ costs that will be recouped varies, you should complete careful research as you plan your projects.

At MortgageDepot, we want to assist you with your goal to optimize your home’s equity. Contact one of our loan originators today to inquire about financing options that could help you to boost equity at a faster rate.

Get in touch with one of our loan consultants for more information.