While you might like the idea of owning your own home, many people actually don’t own much of their home for years and years after they’ve taken on their mortgage. So although you might be a “homeowner”, most people find that the bank actually owns more of their home than they do.
As you own more of your home than the bank does, you start to build equity in your property. What this means is that, when it comes time to sell your property, you will be able to keep a bigger portion of the sale money rather than having to just pay off the bank for your mortgage loan.
To ensure that you’re able to be in this type of positive financial situation sooner rather than later, here are three tips for building more home equity.
Buy A Home Within Your Budget
It’s wise to start thinking about having the most possible equity in your home right from the very beginning. One of the best ways to do this, according to Laura Mueller, a contributor to Moving.com, is to purchase a home that’s well within your budget.
The lower the cost of your home when you purchase it, the more money you should be able to put toward your home as a down payment. This means you’ll have a lower percentage of money that you owe to the bank as you pay off the rest of your home loan, giving you greater equity in your property.
Increase The Value Of Your Home
Another thing you can do that will help you to have more equity in your home is to increase its value over what it was when you first bought the property.
To do this, Marilyn Lewis, a contributor to NerdWallet.com, advises that you make some smart improvements to the property that will boost its resale value without causing you to go further into debt. So rather than making huge renovations that will cost you a lot of money without allowing you to see a proportional return on your investment, try doing smaller projects that will help you build equity.
Lower Your Amount Of Debt
Speaking of debt, lowering the amount of debt you have on your mortgage loan is one of the best ways to get more equity in your home.
According to Justin Pritchard, a contributor to The Balance, there are a number of things you can do that will help you pay off more of your mortgage loan and have less debt owed to the bank for your property. Some of these options include paying larger monthly payments, shortening the length of your loan, or making additional payments whenever you have excess funds.
If you’re wanting to have more equity in your home, consider using the tips mentioned above to help you do just that.