Increasing Home Equity

A home is considered by many to be a very good investment. There is likely a time for you to rent, but it seems like insanity to have to write a check each month, and basically be paying for a place to live that will never be your own. The main reason that a home can be a very good investment is because you will be building equity. Home equity is the value of ownership built up in a home or property that represents the fair market value of the house less any remaining mortgage payments. This value is built up over time as the you make your monthly payments off the mortgage and the market value of the property appreciate. This article will talk about a few ways to increase your equity. 


The more you pay on your house the more equity you are going to build, and that is the most simple way to put equity. If you can, it is very good to start paying a little on the house each month. The little that you pay extra each month is going to increase your equity, but it is also going to reduce the amount of money that you pay on the loan toward interest. It is a simple concept but if you budget in extra money each month toward the mortgage, you will be building equity much faster than normal. 

Home Value

Another way to build equity is to build the overall value of your home. Before you close on your home, the home will be appraised. The same can be said when you sell the home, and the lending company will not lend the buyer more than the home appraises for. So, it is important to invest into your own home. Anything that you do that increases the value of the home is going to help you build equity. Some of the best ways to invest in the home is to complete remodels and update your home.

Neighborhood Value

A big portion of the value of your home will be determined by the neighborhood itself. It is not good for a home to be much nicer than all the surrounding houses. You may be trying to increase the value of your home, but unless your neighbors are on board, it can be very hard to build equity. Most people do want to build equity and thus want to invest in their own property. It is always a good idea to have a neighborhood party where you discuss how you will be increasing the value of the neighborhood.