Saturday, November 23, 2013

With all of the recent talk about home equity, can you afford to not know what it is or how to build it? To start with, it works to help you when applying and qualifying for loans such as car loans and mortgages. Home equity is the difference between the mortgage value of your home compared to the actual value of it. When you have high home equity, you are in strong financial standing because your home is actually worth something viable to the banks.
Every time you watch the news you hear financial experts speak about the benefits of building up home equity and it's true. A stable equity situation benefits you many positive ways financially. The question is though how do you improve it? By following these easy steps, building equity is quite easy to do. Here is how:
  • The first thing you need to try to do is start paying the maximum amount you can. This will be added along with your monthly mortgage payments. This extra money goes against the principle of the loan and will lower the amount of interest and payments over the life of the loan. With every extra amount you pay, you are that much closer to owning your home.
  • Have you thought about refinancing your mortgage for a shorter time frame? This is a viable option many people choose to go with. True, you end up increasing your monthly payments. However, you own your home sooner and end up paying less interest over the period of your loan.
  • Next time you plan on any home improvements or remodeling of your home, think about your home equity before you do any actual work. Improvements such as replacing carpets with hardwood floors increases the equity due to the fact these types of floors are much more desirable. All of these positive changes to your home help build equity to the house regardless if you are selling your home or not. Any type of remodeling works like this.
  • Get in touch with a realtor or someone with experience in the field of real estate for their opinion and advice. Take them on a tour of your home and ask them what they would do to increase the equity of your home. It won't cost you anything so there is no harm in it. Besides, you are getting very reliable suggestions from a professional. Tell them your short term budget and long term budget, and see if they could put together a list of things you would need to do based on priority.
  • Don't forget about the outside of your home and I'm not talking about the siding, either. You also need to maintain your yard and landscape. These play an important role in the amount of equity found in a home. The condition and layout of your lawn is taken into consideration. So does the upkeep of the driveway and sidewalks. If there are any cracks in them, it deducts from the overall value.

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