Easy ways to build home equity

Home equity is defined by the difference between your home’s value and the amount you still owe on the home. Equity
allows you to move forward with other properties and sell your current home.

As you pay down your mortgage, your home equity increases. Luckily, there are a few ways you can increase your equity
and reap the benefits.

Pay towards the principal

The first few years of homeownership, your regular mortgage payments will be mostly towards the interest rather than
the principal value of the loan. The quicker you pay down your home loan principal, the faster you’ll increase the
equity of your home. Check with your lender to see if they offer options for paying against the principal directly.

Complete home improvement projects

There are many home improvement projects you can complete in your home for significant return on both equity and
resale value. Some of the best home improvement projects to add value to your home include:

• • Complete kitchen remodel.

• • Installing new appliances.

• • Replacing garage doors.

• • Bathroom remodel.

• • Landscaping renovations.

Go for a bigger down payment

Did you know you can increase the value of a home before you even buy it? If you offer the traditional 20% down
payment on a house, you’ll build equity a bit faster than if you put down a lower amount, such as 3% or
5%.

If you’ve already purchased your home, you can ask your lender about a cash-in refinance. During this process, the
homeowner makes a large payment on their home loan. Their old mortgage is replaced with one having a lower principal
balance.

These are the main ways to increase your equity without breaking the bank. With a high down payment, careful monthly
payments and home improvement projects, you’ll build equity quickly and be able to experience all the benefits.