Owning a home to build equity has been a part of the American Dream pretty much since its inception. So is being financially free, though more and more both of those things can feel like they are slipping out of reach for many. If you have a home you’re currently paying off, you can make more progress towards achieving both of those goals by building equity in your home. Of course, the sooner the better, so how do you do so quickly?
How to Quickly Build Equity in Your Home: Make a Lump Sum Payment
One way to quickly build equity in your home is to make a lump sum payment. This can be a great option if you have some savings set aside in your bank account. Of course, it’s financially unwise to empty out your savings account. You should still save enough to cover emergencies, or you might find yourself needing to take out a HELOC to make ends meet, undoing the work you just did. If you decide to make a lump sum payment on your house, make sure the payment goes towards your mortgage’s principal. It won’t do you nearly as much good if it just goes towards interest.
Making home improvements is another option for building equity relatively quickly. In order to make the most of this chance to build equity, it’s important to choose projects that offer a lot of value. Kitchen and bathroom projects can yield high returns. That said, it’s important to not go overboard. You don’t want to remodel the kitchen or bathroom so much that it doesn’t make sense for the overall worth of the house. Likewise, unless your home is a good fit for luxury upgrades, you’re probably better off skipping those.
How to Quickly Build Equity in Your Home: Refinance Your Mortgage
If your financial situation has improved since you took out your mortgage, you might want to consider refinancing your mortgage. Shortening your loan term means you’ll be paying off your home more quickly, which means building equity more quickly as well. If you refinance from a 30 year mortgage to a 15 year mortgage, you’ll pay off your home in half the time, building equity twice as quickly as previously. This option may not be for everyone since there are requirements to qualifying to refinance. If your credit score is bad, for example, you may have a more difficult time qualifying for this option.
Building equity faster can feel frustratingly difficult. The 30 years it can take to pay off a home sometimes feels never-ending. Fortunately there are some things you can do to pick up the pace a little. Take a look at your situation and figure out what will work best for you.
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Steelbridge Realty LLC is a Licensed Real Estate Brokerage that utilizes cutting-edge marketing techniques and data-driven Real Estate solutions in today’s ever-changing environment. Our group of professionals have decades of experience and have navigated through many business cycles. Our diverse background gives us the tools to guide people towards successful decisions.