6 Tips For Increasing Home Equity

6 Tips For Increasing Home Equity

Need some strategies for increasing home equity? Many homeowners don’t realize it’s possible to boost the equity of their largest asset and use it to generate more wealth. In this post, the Phil Aitken Home Team will discus six tips for boosting home equity without blowing out your budget.

6 Tips For Increasing Home Equity

1. Wait For Your Home to Appreciate

Taking advantage of your home’s appreciation in the housing market depends on the market’s conditions. Home appreciation is similar to the purchase of stock, in that you’ll earn more as the asset’s value increases. However, stock owners are required to pay on the capital gains they earn. 

Homeowners also have to pay capital gains tax, but there are a couple exclusions that stock owners don’t get. Individual homeowners can exclude $250,000 from their capital gains, while married couples can exclude $500,000. 

2. Make a Larger Down Payment

Decreasing monthly mortgage payments and interest is always appealing. However, you could be working against yourself by stashing extra cash away for a healthy down payment.

Balance is key when juggling a down payment, savings, and monthly budget plan.  Seek advice from an experienced lender who has a broad knowledge of the local housing market and the ability to help you strike that perfect balance.

Related: “What’s In Your Wallet?”

3. Utilize Bonuses

Overtime pay, work bonuses, tax rebates, and other financial extras can make a big dent in your mortgage.  Should you decide to pay down your mortgage via one large payment, ask your lender to recast your payments utilizing the new balance.  You might be surprised by how much lower your monthly payments can be.

4. Reduce the Loan Term

If possible, consider a fifteen-year mortgage term rather than the usual thirty-year term. This will increase your home’s equity at double the speed.  However, the catch is that fifteen-year terms are harder to qualify for. And if you do get approved for one, your monthly payments will be larger.

5. Pay Biweekly

Rather than the usual monthly payment schedule, try to pay twice a month if you can afford to.  You will reduce your thirty-year mortgage by five or six years and increase the speed at which you accrue equity.  But first, be sure to verify with your lender that you are not being penalized for biweekly payments.

6. Make Renovations

New appliances and paint don’t go very far in adding value to a home. But renovating your kitchen, bathrooms, and bedrooms to more modern styles certainly does.  Before beginning any home renovation, research the return on your investment first to make sure you are achieving the added value you hope for.

As always, seek the advice of an experienced lender and professional real estate agent in order to determine the best plan for increasing your home equity.

For more information, contact The Aitken Home Team today!

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Phil Aitken, Owner/Broker
Phil Aitken is the Owner/Broker with Your Home Sold Guaranteed Realty - Phil Aitken Home Team and has over 13 years of Real Estate experience. Phil’s faith and desire for his family’s continued security fuel his business growth and leadership. The Phil Aitken Home Team continues to profoundly impact the people of Jacksonville via supporting several faith-based organizations. Phil gives back a portion of every real estate transaction to The Tim Tebow Foundation and Rethreaded. Find Phil's full story here.