For many families, their largest investment is their home. Over the course of home ownership, the value of the home is likely to increase. There are many steps you can take to ensure that you have positive equity in your home when you go to sell it. According to nerdwallet, here are 6 quick and easy ways to build equity.
- Making a large down payment: The larger the down payment you make, the more instant equity you will receive. A solid universal down payment to strive for, even though there are many different conditions with different loans, is 20%. If you are able to put a 20% down payment when buying your home you’ll be able to avoid private mortgage insurance (PMI) and this will allow you to save money each month.
- Get a 15-year mortgage: There are many different types of loans with different life amounts, but one that is promised to add instant equity to your and that is a 15-year mortgage. Doing a 15-year mortgage versus a 30-year mortgage will save you money because you are paying a lot less in interest (15 years less).
- Improving your home: Another simple and cheap way to increase the equity in your home is to do small home improvements. One of the best ways to improve your home is adding fresh paint to the walls and the baseboards. Some other great improvements include tile in bathrooms, granite counters, adding storage in garage and laundry areas, etc.
- Use other means to make payments: If a 15-year mortgage is not for you and you would like to take another avenue, there are other ways to add equity. You can add equity by paying extra on your mortgage. For example, if you happen to receive items with monetary value such as gifts from family, bonuses from work, selling of something with value, etc. you can use them in addition to your monthly mortgage payment to add equity. If you are interested in doing this or have any question reach out to your mortgage company and make sure the extra money is applied to your mortgage principle.
- Use one partner’s salary: Some couples who are very committed to adding equity very quickly will use one of their salaries to pay only the mortgage and then use the others salary to live off of.