For those new to house marketing lingo, you may ask yourself; what is equity? Defined as the difference between the current market value of a property and the principal balance of all the loans that come with it, equity is a notable factor in the house marketing world. It can be used and converted into cash via a home equity loan or a line of credit or cash, allowing you to have some extra pocket money for whatever financial situation you need it. But how does one raise it? In today’s blog, we’ll be showing you a few methods that you can do to help raise said equity.
Down payments are a surefire way to gain instant equity for your house, and the bigger the down payment, the more equity you’ll have to start. If you’re able to put down at least or above 20%, your chances of having to pay private mortgage insurance (PMI) are slim to none. You can also choose to pay more on your mortgage. By doing so, you’re able to decrease your loan balance faster, increasing your equity. Just make sure that the extra money you’re paying goes towards covering the principal, not interest. If paying isn’t enough, you can always choose to improve your property. Whether it’s remodeling your lawn, installing new door replacements, these changes can help boost your equity. However, unless you’re remodeling for the sole purpose of selling your home, you may want to think how much the improvements made will enhance your living experience rather than the buyer.
These are just a few examples of how you can help build equity for your home. Always make sure to consult a real estate agent or other home professionals with ways of raising equity before deciding to move forward on these plans. If you need advice when it comes to raising equity and other home financing issues, Mortgages Done Right has got you covered. Call us today and see how we can help you!