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Buying a home is a big step for both your family and your financial wellbeing. As you pay off your mortgage, you begin to build equity in your home. Equity is the difference between the market value of your home and how much you still owe. If that number is positive, you’ve built equity, which can come in handy if you ever need to take out a loan or as a profit when you decide to sell your home. Here are some ways you can build equity in your home faster.
By Christopher Kelly, RE/MAX Bayside
You have a certain amount that you’re required to pay on your mortgage each month, but you don’t have to stop at the minimum. A large portion of mortgage payments covers interest and insurance. Upping your payment to pay down your principal loan amount will speed up your payment schedule. Even an extra $50 a month can have a big impact.
The amount of equity you have in your home depends on what your home is worth, so making upgrades that increase the value of your home is another way to increase your equity. One of the most lucrative upgrades you can make is replacing old garage doors. Just be sure to do your research when upgrading your home to see which renovations offer the greatest return on investment.
Restructure Your Mortgage
If you initially signed up for a 30 year mortgage, but are now at a point where you want to pay your loan off faster, you may benefit from switching to a 15-year plan. You’ll pay more each month, but you’ll pay less interest over time and could pay off your mortgage years ahead of schedule.