There are many ways in which you can increase the value of your home and invest in it. Upgrading, repairing and paying of liens all build equity and get you one step closer to full ownership. Try these four strategies of investing in your home to grow your home equity.
Make Necessary Repairs
Making necessary repairs is an important way of investing in your home. A new roof not only adds value and aesthetic appeal, but it also prevents major damage. Installing new siding, doors or repairing a fence also adds equity to your home by increasing its value. Inside, replacing the furnace and air conditioning, upgrading the electrical panel, fixing the plumbing and installing new flooring could also increase equity.
Understand How Home Equity Works
Home equity is the measure of the market value against any outstanding loans or liens against the property. For example, if you put $50,000 down on your home and take out a $200,000 mortgage, and your property’s fair market value is $300,000, you have a $100,000 or 33 percent equity. Some companies, like General Electric Credit Union, know that you can increase your equity by making mortgage payments or waiting for your property value to increase.
Increase the Aesthetic Appeal of Your Home
Instead of waiting for property values to increase based on time or market trends, you could make investments that increase the aesthetic appeal of your property. For example, painting the outside of your home and caring for the landscaping make a big difference in how your property looks. Pouring a new concrete driveway, trimming the trees and shrubs and upgrading to new windows also enhance your home’s aesthetic appeal and property value.
Pay off Your Mortgage Early
Waiting for the value of your property to increase as a way of increasing equity is not a guarantee. Not all property values will go up. Fluctuations in the market, nearby foreclosures, construction, or housing trends could cause your property value to go down. A surefire way to increase equity is to pay off any liens on your property, including your mortgage.
Consider using a combination of these techniques in order to invest in your home and build equity. Remember that the point of equity is to build up a sort of credit that could be borrowed against or converted into cash. If you plan on staying in your house for a long time, make investments in your home for structural and aesthetic reasons that make you happy.
This guest post is written by Rachelle Wilber, a freelance writer living in the San Diego area. She graduated from San Diego State University with her BA in Journalism and Media Studies. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on twitter @RachelleWilber.
