A home of your own may be the biggest investment you make in your lifetime. After saving up a substantial downpayment, you look for a lender to provide your mortgage and financing.
You work hard to earn income to support your household and make your mortgage payments. So with all the time, effort, finances, and hard work you have put into your home, how can you protect it?
And how can you make the mortgage work for you? The answer is through a home equity loan.
What is Home Equity?
As a homeowner, your mortgage payments help you build home equity.
The more you have paid in mortgage over time represents the amount of the home you own, calculated by subtracting your mortgage balance from your home’s market value.
As time goes by, your home equity increases as you pay off more of your home. Building this home equity is vital to your household’s financial health.
The more of the home that you own, the more you can utilize it as a resource should you have an unexpected expense if you desire to take advantage of a business opportunity, or us it as an investment strategy.
That’s where a home equity loan comes into play. You’re able to draw from the equity you have by taking out a loan against it.
How to Build your Home Equity
Now that you have determined how important your home equity is, here are some ways to increase your home equity.
One way to start yourself off with more home equity is to make a bigger down payment on your home if you’re able to do so. It’s might be worth it to crowdfund additions to your savings for your down payment from friends and family.
There may be people in your life who would jump at the chance to help you achieve your dream of homeownership; especially if you’re just starting out, and you need a little hand up to make it to the next level of success in your life.
Another way to increase your home equity to improve your property value is through home remodeling and home improvement. Build a better investment with your own sweat equity if you’re at all handy.
You can also teach yourself a lot of DIY tasks, for example, YouTube is full of home improvement and repair videos from varied professionals.
Another option is to find local courses to assist you in learning skills to complete projects you wish to tackle.
Or if you’re too busy, not interested in working on your home yourself, or don’t have the aptitude or ability for physical labor, you can source contractors to make improvements to your home whenever you can afford an upgrade here or there.
Over time, these improvements will accrue to add considerable equity to your home.
Finally, you can increase your home equity faster by choosing to pay your mortgage on a biweekly basis, rather than monthly.
This way you’re paying off your mortgage faster by making twenty-six payments a year, instead of the standard twelve, often making one entire mortgage payment more per year.
Similarly, you can shorten the length of time you have to repay back your mortgage loan. At the beginning of your agreement, choosing a shorter loan time will mean you’ll secure greater home equity in a shorter period of time.
Whichever tools you choose to use to achieve greater home equity, it’s possible to increase your equity with some information, effort, and guidance from professionals.
Megastar Financial Corporation is here to partner with you, on everything from mortgage and financing to home equity. Please don’t hesitate to contact us with any questions you may have about the process of homeownership and adding equity to your home.
We would be happy to show you how to make your home works for you right now, and for all the years to come.