Right now, home equity is flourishing. To make it simple, home equity is the value of your property minus the loan on your property. Home equity is important when you want to sell your home or refinance your mortgage. There are a few ways you can build equity in your home.
One very simple way to build home equity is by paying your mortgage when it is due. As long as your mortgage is not an interest-only home loan, you pay your interest and some of your principal.
A homeowner also gains home equity if the value of their home increases. This is not something a homeowner has any control over as if the value of a home decreases, their home equity will decrease as well.
When paying your mortgage each month, if you pay a larger payment than what is due, you will be paying more toward the principal of your loan. This helps you to pay your mortgage quicker, thus gaining home equity quicker as well. If you do not want to (or are not able) to pay larger payments each month, you can also get on a biweekly payment plan. By paying in this fashion, you will save in interest and build home equity faster.
Making improvements to your home, when the value is more than the coast, your home equity will be increased. If you are a handy person and able to do some of the work on your own, you will save on labor cost. Keeping up with your home, maintenance wise, will also create more home equity. For example, if your air conditioning is in good shape, when you go to sell the home, the potential buyer will not request a repair.
Keep in mind that if the house looks good when you go to sell it (a fresh paint job, plants and flowers everywhere, a clean home, etc.) the more likely the house will sell for more.
Building home equity does not have to be difficult. As you can see, there are some easy ways to build it.