An equity increase in your property is a great financial move and can help put you in a better financial position. However, increasing your equity isn’t always as simple as it may seem. Knowing how to increase equity in your property is its own challenge.
First though, it’s important to understand what equity is before you can go for an equity increase. At a basic level, equity is the dollar amount of your home that you own. So the more of your mortgage you have paid off, the more equity you have in your home.
Increasing your equity will ultimately help you gain financial independence and put you in a better financial position. With that covered, let’s move onto how you can get an equity increase.
How To Build Equity In Your Property
So, how exactly do you get an equity increase in your home or property? The simplest way to increase your equity is by increasing your down payment. If you pay more every month towards your mortgage, you will be slowly increasing your equity. If you need help with knowing how to increase your down payment, get in touch with us.
Another way to build equity in your property is to make extra mortgage payments. It is not as common, but you can make extra payments on your mortgage for an equity increase. This is a great way to build equity, as you are directly increasing it by paying more towards your mortgage.
There are also other less direct ways to get an equity increase, such as refinancing and shortening your loan term. If you shorten your mortgage, your payments will be larger (and possibly more frequent), which means you will be gaining more equity.
Lastly, you can also get an equity increase by renovating your home and raising its value. If you invest in your home and make it more valuable, you will increase your equity. Renovations also make your home nicer, so it’s a win-win.
How Equity Can Be Used
Another common question about equity is how equity can be used. After an equity increase, you have a few options with what you can do with that equity, which you can also read about on our blog
First, you can use your equity to purchase a new home. If you’re ready for a move and want to sell your home, you’ll make more money the more equity you have, and you can use that profit to purchase your next home.
Another thing you can do with equity after an equity increase is to use it for borrowing funds. You can use your equity to get a home equity loan, which can be used for renovations, consolidating debt, and more.
There’s also the option to get a home equity line of credit, which can be a great way to utilize your equity increase. Again, you can use your equity to borrow funds for home renovations or other projects. You only have to pay back what you actually borrowed, so a home equity line of credit can be a great option for homeowners to take advantage of their equity.
How to Find Out Your Equity
With all that covered, you may be wondering how to find out your equity. It’s important to know what your equity is in your property before you can work towards an equity increase, so let’s cover how to find out your equity.
Thankfully, finding out your equity is actually fairly simple. Home equity is the difference between the appraised value of your home and the amount you still owe on your mortgage. So all you have to do is make that simple calculation and you will have your home equity. If you don’t have that information on hand, you can always contact your lender or bank for updated information on what you’ve paid and what you owe.