5 Ways To Increase Your Equity

A home purchase brings together so many things under one roof: dreams, shelter, status, maybe a passport to better schools and neighborhoods. And one more thing: It gives you a forced savings account.

It does that by letting you build home equity, which is the difference between your home’s market value and what you owe on it. Your equity increases with each house payment you make. When home prices rise, your equity grows faster as your home’s value increases.

Here are some ways to increase your home equity…

1. Pay more on your mortgage

Paying more can be a good option. If you decide to do this, make sure the extra money is applied to your mortgage principal. Ask your mortgage servicer (you can find the phone number on your monthly statement) how to do it and watch your monthly statements to be sure the money is credited correctly. Here are a few ways to pay more regularly:

• Add an extra sum to your monthly payment. Pick an amount big enough to make a difference but not so big that it crimps your budget. For example, if your payment is $983, round up to $1,100, and then increase the amount when you’re able.
• Another version of adding to your monthly payment: Boost the payment by an amount equal to a twelfth of a payment. By the year’s end, you’ll have made an extra payment.
• Switch to biweekly mortgage payments. Paying every two weeks instead of monthly adds one extra monthly payment to your mortgage annually.
• Schedule extra payments automatically from your bank to your mortgage account at regular intervals

The belt-tightening can be demanding but the rewards can be extreme.

2. Use gifts, bonuses and windfalls

If you don’t want the commitment that comes with a 15-year mortgage or increasing the size of your payment, look for cash that dribbles in here and there. Dedicate overtime pay, bonuses or every other bonus to building equity. Cash gifts during the holidays? Ditto.

If you are fortunate enough to inherit money, use at least part of it to pay down the mortgage. Your mortgage servicer can tell you how to add dribs and drabs or a big windfall to your equity. As before, make certain the money goes toward the principal, not interest.

3. Make your home low-maintenance and more efficient

Since many home buyers worry about buying a home that will need constant maintenance, replacing a major component before putting it up for sale — like the furnace, water heater or even the roof — may calm fears of an emergency repair in the near future and help get you a higher price.

Improvements that make things easy to clean and maintain may also increase home value. Consider replacing easily stained carpet with hardwood floors or replace high-maintenance wood siding with vinyl siding.

Energy conservation features can have a significant impact on home value, depending on what area of the country you’re in, Joanne Theunissen, chair of the National Association of Home Builders Remodelers, said in an email. Energy-efficient mortgages (EEMs) allow borrowers to take on additional debt to cover both the purchase of the home as well as energy-efficient upgrades. EEMs can also offer lower mortgage rates to increase purchasing power, according to Energy.gov.

4. Remodeling the Kitchen

Most people consider the kitchen to be the heart of the home, and because of this, updates in this room pay off. According to HGTV, you can expect to recoup 60%-120% of your investment on a kitchen remodel, as long as you don’t go overboard.

Be sure that the style, size, and quality of the kitchen fits in with the rest of the house.  You should never make your kitchen fancier than the rest of the house, or the neighborhood. If you plan on selling your home within the next five years, keep potential buyers in mind before you start on any major remodel; some people won’t pay for a fancy, deluxe kitchen.

A Little Paint Goes a Long Way
When it comes to how much you spend on a kitchen remodel, prices can run the gamut. Get the biggest bang for your buck on a kitchen remodel by looking at color. Fresh paint, in modern colors, can go a long way towards updating the look of your kitchen. Plus, paint is relatively cheap.

Energy-Efficient Appliances
Replace old appliances with energy-efficient models. Energy Star-rated appliances are better for the environment, and they also help you save money, because they use less energy. Potential buyers often look for ways to save money when shopping for a new home.

5. Beautify your bathroom

Of all the rooms in your house, the bathroom is the workhorse. There is lots of wear and tear, so you want to keep it functioning well and make good looking upgrades along the way.

  • Focus on your faucet. Bathrooms are not utilitarian anymore. People like to feel relaxed, like they are in a spa. Drop-sinks are old news, people want the under-mount sinks.
  • Go granite or marble with your countertops. If you are toying with the granite idea, your bathroom counter is most likely smaller than your kitchen counter and less expensive. This is a great place to start your first granite project.
  • Nix the overhead lighting in favor of wall mounts to add warmth and value to your bathroom. Make sure that around your mirror you have even lighting with no side shadows.
  • Upgrade your bath area. With an 85 percent return, install a shower with body sprays and stone surround tile. If you are not selling right away, you will feel like you are in a Zen garden every time you step into your bathroom.
  • Keep it clean. Dirt and grime can become embedded in bathroom surfaces very quickly. Freshen it up with new grout.

To step on the gas and speed up the growth of equity, you’ve got two main tools: You can increase the home’s value or reduce the mortgage debt. Or both.


For up-to-date information on YOUR Indiana area neighborhood or a FREE Seller Consultation – call The Romanski Group at (765) 293.9200.  Using an experienced team is the way to get your home ‪SOLD‬! You deserve the BEST Real Estate Team in the Lafayette Indiana area!

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