How Much Home Equity Do You Have?
Home equity is concerned with the percentage of a home’s worth that a homeowner owns. Home equity is usually a piece of cake to calculate when a home is newly bought because it is simply the down payment for the home. Your down payment equals the percentage of home equity you own and this will increase as you continue to pay your mortgage.
Building home equity can be very stressful for homeowners particularly because a lot of them cannot imagine themselves spending a long number of years paying off their mortgage. Here are some ways you can gather home equity and not be stressed while doing it:
Make Payments Every Two Weeks
Make mortgage payments every two weeks. By the end of the year, you will have made payments for 13 months instead of 12 months. While doing this, you should verify if it is okay by your lender and you won’t be charged for it.
Another very important thing that homeowners need to have at the back of their minds is that the main thing most lenders consider when it comes to giving mortgage loans is how much your down payment is. This gives them an insight into how much you have as far as cash reservation is concerned.
The Larger The Down Payment, The Better
The bigger your down payment is, the more home equity you are able to get. If you decide to wait until you have saved enough money, you run the risk of not being able to build equity through appreciation and also not being able to meet up with your financial targets. For this reason, you must clearly map out a plan for your other financial priorities.
Take Advantage of Spare Cash
We cannot overemphasize what a blessing spare cash is. Work bonuses and cash gifts can be used to pay part of your mortgage. Depending on how much you are paying, the lender might be able to recalculate your payment.
Allow Your Home Appreciate
The first thing to understand about building home equity through appreciation is that it requires time, and it can either be little or a lot – depending on the situation of the market. Think about home appreciation like buying stock and being on the benefitting end as the value rises.
Make Your Home Better
Paint jobs and new appliances do not do the trick when trying to get home equity. Kitchen makeovers, adding new rooms, a garage, a driveway are the kind of things that increase a home’s value so try to do some of them.