As a homeowner (or soon-to-be homeowner), you most likely hear this phrase a lot, “Build up that home equity!” But why build it up in the first place?
Home equity is an important financial resource for you that you can take advantage of at a later date. Home equity is the amount of the home’s value that you officially own, so that value can go towards a variety of things like:
When putting your home equity towards any of these, remember that you will have to build it back up.
When you make your loan payments, you probably pay the minimum amount each month. But did you know that if you pay a little more each month, that that extra money will go towards your principal payment? That way, you are not only paying your mortgage off quicker, but reducing interest over time.
You could even pay on your mortgage twice a month, but make sure that it is within your budget, allowing you to pay other bills and for other living necessities. If you are making additional payments towards the loan’s principal, be sure to tell your lender that. Otherwise, they may apply it to the next payment or late fees.
If you choose to pay extra towards your mortgage each month or pay twice a month, double check with your lender to see if they will charge you a prepayment penalty. Many mortgages may not come with a penalty, especially if the loan is an FHA, VA, or USDA loan, but always make sure.
Making improvements to your home can boost your home’s value and by extension, the equity. This is because you are making the home more valuable and desirable to live in. So if it is within your budget, consider updating your kitchen and bathrooms, landscaping to boost curb appeal, and maybe finish the basement for good measure.
Putting a home into a trust may seem like an option reserved for older homeowners who have paid off their mortgage and have accumulated an estate, including assets such as a home, motor vehicles, various investments, boats, rental properties, furniture and even a vacation home. However, having a home that’s owned outright is not necessary […]
The start of a new year is often seen as the time to make major changes in life. While many people resolve to start hitting the gym, losing weight, reading more, or making a career change, others may decide to buy a new home in the coming months. That’s a great goal, one that can […]
Buying a home is one of the most exciting events in a person’s life. A new home can mean a new direction, a major step forward, the beginning of a family or just a fun opportunity to live in a new state, city or neighborhood. It’s also a complex task that involves several important steps. […]
