Building your Home Equity
Posted On:
12/12/2021
Building your Home Equity
You’ve probably read about Home Equity a lot of times, and wondered what it means. There’s a lot of buzz around what home equity is and how there are several tricks and tips to keep increasing home equity.
So today, let’s take a step to understand what ‘Home Equity’ actually means and how you can take the right steps to build a greater equity for your home.
Demystifying the Mystery of Home Equity
The difference between your home’s market value and what you owe in all outstanding balance of it, is basically home equity. It is the real property value, something that grows as you make payments against the outstanding balance.
Let’s see an example to understand the concept. Hypothetically, if your home is valued at $100,000 and you owe $40,000 in loans, then your home’s equity is $60,000. Your home equity will keep going upwards as you make payments towards your outstanding or it can also increase as your home’s market value goes up.
How can you increase your home equity?
Increase your down payments / Make bigger or frequent mortgage payments
As we saw in the example above, home equity will keep growing as you reduce your outstanding balance. The more you pay in down payments or make greater mortgage payments, your home equity will increase.
It is one of the most ideal ways of building greater equity for your property.
Relook at Sources of Income
Imagine if you are paying just the bare minimum amount towards the outstanding each month, you’re not likely to build any valuable equity for your home. Finding at new sources of income, such as relooking at your budget, gifts, bonuses and driving them towards paying off your principal, will build your equity more quickly.
Boost your homes market value
Simple renovations or remodelling are a great way to increasing the market value of your home. Simplistic ideas like upgrading your kitchen model for example, or redoing few of the interior designs can boost the market value of your home.
Rest on Property Growth
Real Estate is one of the greatest investments of all time. Its value is ever growing. Your home equity naturally is increasing, making payments is a bonus to the equity. However, you must exercise caution when investing in real estate. Property value appreciates rightly in good neighbourhoods, current property condition, surroundings and a multitude of factors.
Secure the future of yourself, your family by choosing the right home and taking the right steps in building greater home equity.
Choose Al Hoor Real Estate as a guide for real estate and property investment related consultations.
Contact us:
Al Hoor Real Estate