When you buy a home, you likely won’t have much equity in that home for quite some time. But luckily, there are things you can do that will help you to build equity faster than you otherwise would if you simply paid your minimum monthly payment each month.
To show you how you can own a greater portion of your home at a faster rate, here are three ways you can quickly build equity in your home.
Increase The Value Of Your Home
At the time you bought your home, it was worth whatever amount you ended up paying for it. But if you’re able to do something that can increase the value of your home, like complete some home improvement projects, you’ll quickly build equity in your home because it will now be worth more than when you bought it.
According to Justin Pritchard, a contributor to The Balance, updating areas of your home like the kitchen or bathrooms as well as doing some additional landscaping or installing more energy-efficient accessories can do a lot to improve the value of your home. But when picking a home improvement project with the purpose of increasing the value of your home and building equity, make sure you pick something that will have a great return on your initial investment.
Consider Refinancing Your Home Loan
Another great way that you could build more equity in your home is by refinancing your home loan. Under the right conditions, refinancing could help you own a greater portion of your home.
Marilyn Lewis, a contributor to NerdWallet.com, shares that especially if you’re able to reduce the terms of your home loan from a 30-year mortgage to a 15-year mortgage, you’ll be able to have more of your monthly payment going toward the principal rather than the interest, which means you’ll have put more of your money toward building equity as opposed to just paying money to your lender.
Pay Down Your Home Loan As Quickly As Possible
To gain equity in your home in a more traditional way, Amanda Dixon, a contributor to SmartAsset.com, recommends that you simply work to pay down your home loan as quickly as possible.
To help you in doing this, one strategy could be to put down a large down payment when you first get your home loan. This will allow you to have a smaller home loan and have less of your home owned by your lender. In addition to this, you could also commit to paying more than your minimum monthly payment or to put any extra money you come into toward paying down your home loan.
If you want to build equity in your home faster than you otherwise could, consider using the tips mentioned above to help you learn how you can do just this.