What Can I Do to Build My Home Equity Faster?

Home equity is a tool in homeowners hands that can be used to reach a variety of different goals. Your home equity will passively grow as the real estate market around you grows, but there are also some things you can do to boost the value of your home more quickly. If you want to grow your home equity faster, consider these strategies.

What is home equity?

First, it's important to understand how home equity is calculated. Your home equity is the difference between the current market value of your home and how much you owe on it. For example, if you have $300,000 left on your mortgage, but your home is worth $500,000, you have $200,000 in equity. 

Your home equity will naturally grow over time based on two factors: paying down your mortgage principal each month and growth in the market. In St. George, homes tend to appreciate well thanks to steady demand for housing in the area. So these two factors alone will be building your equity over the time you are in the home. 

However, if you want that equity to grow faster so you can leverage it through a refinance, a home equity loan, or a home equity line of credit, or because you're hoping to sell your home in St. George and make a higher profit, there are some things you can do to boost your home equity more quickly. 

Make Extra Mortgage Payments

One of the most straightforward ways to build equity in your home is by making extra payments on your mortgage. By paying more than the required monthly amount, you reduce the principal balance faster and decrease the total interest paid over the life of the loan. There are several ways to do this:

• Biweekly Payments: Instead of making monthly payments, consider paying half of your mortgage payment every two weeks. This results in an extra full payment each year, which accelerates principal reduction and builds equity faster.
• Additional Principal Payments: You can make one-time lump-sum payments toward the principal or add extra amounts to your regular payments. Even small additional payments can make a significant difference over time.
• Round-Up Payments: Round up your monthly payment to the nearest hundred dollars. For instance, if your mortgage payment is $1,150, rounding up to $1,200 can help you build equity more quickly.

This temporary increase in your monthly expenses can make a big difference if you have goals to grow the equity you have in your home by this time next year. 

Boost Your Home's Value through Renovations

Investing in home improvements can enhance your property’s value and, consequently, your home equity. However, this strategy only works when the ROI is strong because you've chosen renovations that not only make the home more attractive and functional, but actually translate into a higher appraised value. 

Home renovations that are known to increase the value of the property include:

• Kitchen Remodels: Updating your kitchen with modern appliances, countertops, and cabinetry can significantly boost your home’s value.
• Bathroom Renovations: Remodeling bathrooms with contemporary fixtures, new tile, and updated vanities can also increase your home’s worth.
• Energy-Efficient Upgrades: Installing energy-efficient windows, doors, and HVAC systems can lower utility costs and add value to your home.
• Additions: When you add a bedroom, bathroom, mother-in-law's quarters, or extra living space, the square footage of your home increases and the value grows right along with it. 

Home Maintenance

Don't underestimate the power of good home maintenance to preserve and even boost the value of your home. An appraiser takes into consideration not just the size and features of the home, but its condition, too. 

Addressing minor repairs and keeping up with routine maintenance prevents more significant issues from arising. Make sure you are keeping up with regular cleaning and maintenance, including:

• Routine Inspections: Regularly inspect your home for issues such as leaks, electrical problems, and structural damage.
• HVAC Maintenance: Schedule annual HVAC system maintenance to ensure it operates efficiently and extends its lifespan.
• Roof and Gutter Care: Clean gutters regularly and address any roofing issues to prevent water damage and maintain the integrity of your home.

Conrad Steller with The Steller Group explains the importance of good home maintenance: "Consistent and thoughtful home maintenance is crucial for preserving and enhancing your property value, as it ensures that your home remains in top condition and is ready to attract your ideal buyers"

Pay Attention to Market Trends

Stay informed about the property value trends in your neighborhood and make improvements that align with market demands. Enhancing your property in ways that are desirable to potential buyers can boost its market value and, consequently, your equity. Research which types of improvements are most likely to yield a high ROI in your area.

If you think you'll be selling your home in the next few years, we can help you determine what features will be most worth your investment based on what buyers in your area are looking for. Our years of local market experience can become your greatest asset in the journey towards a successful home sale. 

Ready to learn more about owning a home in St. George? Contact us any time.