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Ready To Build Your Equity Empire? Here's 6 Tips...

September 01,2023 | Posted By Gary Macrides in Financial
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One of the best ways to create wealth through homeownership......Build equity.

Home equity is the percentage of your home’s value that you own. It is also the key to increasing wealth through homeownership. But how exactly do you do that? Keep reading for six savvy strategies to build home equity without busting your budget.

  1. Let Your Home Appreciate

    Building equity can happen quickly or gradually, depending on the housing market. For example, from April 2016 to April 2018, the median home value increased from $185,000 to $216,000. If you bought a $185,000 home in 2016 with a down payment of $12,950, your initial 7% equity would have grown to 23% by 2018. This equity growth involves subtracting your loan balance from your home’s value. Then, you divide the difference by its value. Around 16% of this equity comes from paying down your mortgage. The rest is from market appreciation.

  2. Put More Down

    Larger down payments can help, but waiting might also hinder equity growth. This is why you have to balance down payment, budget, and saving for other priorities. A good lender can give you rates and market insights to do just that.

  3. Leverage Financial Windfalls

    Use bonuses, gifts, or inheritances to pay down your mortgage. Some lenders may even adjust your payment based on the new balance.

  4. Decrease Your Loan Term

    Choosing a 15-year mortgage instead of a 30-year doubles equity growth. However, because this also means you’ll have a significantly higher  monthly payment, you may have a harder time qualifying for a loan.

  5. Pay Biweekly

    Rather than a monthly payment, consider paying once every two weeks. Doing this will shave off five to six years from a 30-year mortgage. Just ensure your lender doesn’t charge a fee for processing semimonthly payments first.

  6. Update Your Home

    Upgrades such as new appliances or surface-level changes like new paint typically don’t significantly raise home value. Instead, substantial improvements like kitchen makeovers or new wood flooring have a more substantial impact. Before you begin, make sure that the expenses for such updates justify the increased value you desire.

    To access equity you can either sell your home or borrow against your home, The latter has options that include; home equity line of credit (HELOC), home equity loan, or cash-out refinance. Compare the pros and cons of each option and discuss them with your lender. Rates may increase, affecting borrowing costs.


Gary Macrides , my selling realtor, never made me feel pressured in anyway during the real estate process. He’s a wonderful one of...
- HM


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