Ways To Increase Your Equity In Your Home
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When it comes time to sell a property, most home-owners make repairs and improvements to increase the value of their house at the sale. What they want is to take more equity out of the sale. There are two ways to increase the equity in your home. Sell it at a higher price. Or increase payments on your mortgage to pay off the loan faster.
Making Your Home More Attractive
Many people get used to old carpets, walls that could use a coat of paint and doors that squeak. When your real estate agent walks through your home he or she will give the client a list of things to do that will spruce up the house and hopefully increase its value. Be careful how much you do in this regard. Cleaning up and applying some paint is not all that expensive but finishing off the basement recreation room may be expensive and may cost more than it contributes to the increased sale price of the home.
Picking A Real Estate Agent
Something like four out of five people who start out in real estate are gone before five years are up. They did not usually find a better job. They simply we not good at their job. When you want to increase the equity that your take out of the sale of your home pick a realtor who has been around for a few years, knows the market and knows how to find you buyers. A little extra effort on the part of your real estate agent may result in a substantially higher sale price and more equity in your pocket at the sale.
Paying More and Sooner Payments For Your Mortgage
This approach starts as soon as your purchase your home. Hopefully, you bought a home with mortgage payments that are less than a fourth of your take-home pay. That way you have some money left over at the end of each month. Budget that excess cash and start making extra mortgage payments, quarterly is great but whenever you can is good. The idea is to set up a schedule of extra payments. Make sure your lender allows this when you are out shopping for pre-approval for your loan.
Every time you make an extra, early mortgage payment you reduce the amount you owe the lender. Then, on the very next mortgage payment, your interest payment is just a little bit less and your payment on principal is just a little bit more. Each time you make an early payment the amount you owe is reduced and with it the interest you pay. Pretty soon you are seeing a significant increase in how much of your normal mortgage payment goes to your ever-smaller debt because what you are paying on interest is less and less. What happens with this approach is that your equity in your home goes up and you will, in fact, pay off your mortgage much soon. Then, when you sell your home, you will be able to apply all of the equity in the property, which is all yours, to the purchase of a newer and nicer home