Building Equity in Your Home

What You Need To Know

Home equity is an asset, the part of your home that you actually own. You can use it to finance a college education, remodel, invest, or supplement your retirement. Subtract what you owe on your home from the market value — the amount left over is your equity.

These five tips can help increase the equity in your home:

Tips to Increase Home Equity


1. Make a Big Down Payment

Get equity from the start with a larger down payment. If you put down 20% or more of the property’s value, you’ll avoid private mortgage insurance (PMI).

Less fees means more money goes to paying off your home.

2. Focus on Paying Off Your Mortgage

If you can make larger monthly payments, you can build equity faster. Even a few hundred dollars can go a long way to paying down your mortgage faster. Be sure the extra payments are set to go to the principal.

Consider biweekly mortgage payments. Paying every two weeks instead of monthly adds one extra monthly payment to your mortgage annually.

3. Refinance to a Shorter Loan Term

By refinancing a 30-year mortgage to a 15-year loan, you can finish paying your mortgage off in half the time.

To qualify, you’ll need to have good credit, a certain amount of equity already and a low debt-to-income ratio. Check your credit score before applying.

4. Renovate Your Home

A bathroom remodel or a major kitchen renovation can add significant value to your home and increase equity.

Smaller projects like replacing entry doors, updating lighting fixtures, repainting the kitchen or replacing appliances, are great for increasing equity, especially if you don’t need to finance these alterations.

5. Add Curb Appeal

The general attractiveness of your home from the sidewalk can make a big difference to improving your home’s value. Even if you’re not planning to sell right now, consider adding flowers, lighting up the exterior, adding hardscape or planting a tree.

Tips to Increase Home Equity
Renovate Your Home
Add Curb Appeal
Tips to increase home equity

Final Thoughts


  • Building equity in your home is important for your financial future.
  • When you’re searching for a new home, consider factors that will enable it to grow in value. Once you’ve moved in, build equity by increasing your property value or decreasing the amount of debt you own.

  • Let’s Connect. We’d Love to help.

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December 19, 2020

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