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8 Ways to Build Home Equity

A home is an investment, and many people take out 30-year mortgages to pay them off. However, there are some ways to speed up the process if you’re feeling impatient. If you want to build equity in your home, consider these 8 different ideas to increase the value and pay it off faster.

1. Pick Up a Side Project

The tried and true method of making money fast is taking on a side project. It can be as simple as creating a freelance profile and picking up writing or marketing gigs online, signing up and driving for a car sharing service, or many other options. Then, keep budgeting the same way you always have and simply roll any extra income from your side projects directly into your mortgage payments. Easy!

2. Make a Bigger Down Payment

Although most people know you should try to put down at least 20% when you buy a home, many end up paying far less. In fact, some loans even offer a 0% down payment. However, if you want to build equity, paying a large down payment is one of the fastest and easiest ways to do it. If you pay 20% or more you won’t have to pay extra PMI (private mortgage insurance) fees, you’ll spend less money on interest, and you can shave years off your loan.

3. Don’t Fall Into the Trap of “Lifestyle Creep”

Lifestyle creep is a term that refers to the way people often increase their standard of living along with their income. Going to nicer restaurants, buying more clothes, and taking vacations can all quickly eat up money from your raise or bonus. Instead, try to resist the trap. Whether it’s a raise, bonus, or an inheritance, the kids moving out or graduating from college, keep living with the same budget. All the extra money should go directly into a savings account so you don’t even see it, and it can then be used to pay off your mortgage and increasing home equity!

4. Switch from a 30-Year to a 15-Year Mortgage

Yes, cutting your loan length in half will increase your monthly payments, but it will also put you on the road to full ownership of your house in only 15 short years. Take a hard look at your budget and see if it’s possible to switch from a 30-year to a 15-year mortgage on your home. Just like paying the larger down payment, it may hurt a bit up front, but you’ll save money in interest down the road.

5. Complete Home Renovations

If you want to build equity with renovations, approach this idea with care. Some renovations will increase the value of your house much better than others and give you a greater return on your investment. Certain renovation projects will recoup 75% or more of the cost in resale value, so if you want to build equity fast, consider hiring a contractor or planning a DIY weekend to get one done.

6. Sign Up for Bi-weekly Payments

If all of these ideas to build home equity seem a bit drastic for you, try this step instead. Signing up for bi-weekly payments is a tiny change that makes a huge difference. When you cut your mortgage payment in half and make it twice a month instead of only once, you’ll end up making 13 payments every year instead of 12. Although you’ll hardly notice the difference, it can actually shave years off of your mortgage!

7. Slowly Increase Your Monthly Payments

You don’t have to immediately double your mortgage payment and jump from a 30-year to a 15-year plan. Instead, take a look at your budget and see what you can cut. Maybe you can pack your lunch for work instead of eating out. Or, cancel a streaming service you never use. The small things add up, and you’ll notice when you start to use the savings to slowly increase your monthly payments and watch your home equity go up.

8. Choose Your Neighborhood Wisely

This is surely the simplest way to increase your home equity without expending any effort on your part. If you buy your home in the right neighborhood, you can watch the value go up as the years go by. In fact, CNBC reports that the average home value was worth $101,000 in 1990 and $119,000 in 2000, giving owners a $17,000 increase in only ten years!

Try These 8 Ideas to Build Home Equity

There isn’t only one way to build your equity in your home. You can increase payments, let your house appreciate over time, complete strategic renovations, and more. Your house is your investment, and it’s a dream for many to have full ownership of their home. If that’s the case, use these 8 ideas to build your home equity and make that dream come true!

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