Maximizing Home Equity: Expert Strategies for Increasing Your Property’s Value

How to increase home equity

Ditch the mortgage insurance

Most buyers have to pay a mortgage insurance along with their mortgage payment for any down payment amount that is less than 20%. That means you’re paying an unnecessary premium for a smaller down payment. Put another way: it is more cost-effective and will help you increase home equity to put down a larger down payment.

This option isn’t available to everyone, especially first-time home buyers, which is why mortgage insurance exists. However, you want to minimize the amount of time you have to spend towards anything other than your principal, so getting to 20% as quickly as you can is in your financial best interest.

Make a bonus mortgage payment once a year

Depending on the size of your loan, you could be making monthly mortgage payments for years without ever touching your principal. That means all your monthly payments are just going towards the interest on your loan, and not the actual loan itself. This is a major impediment to a homeowner who is trying to increase home equity, because it doesn’t allow direct payments to reduce the size of the principal loan.

So, how do you start to reduce your principal? There are a few ways. You can save up for a one-time payment or you can divide your mortgage payment by 12 and pay a little extra on each month’s mortgage payment throughout the year. Another strategy is to switch from monthly payments to bi-weekly payments. So paying half your mortgage payment twice a month instead of paying your whole mortgage payment once a month. Sounds like the exact same thing, but in reality you end up making 26 payments – which is 13 months. So just by changing the frequency of your payments, you can sneak in an extra month’s mortgage premium without being any the wiser.

Wait for the market to appreciate

Time is a powerful tool. As the housing market increases in value, so does your home. As a result, the equity you have in your home also increases.

The market is a general term that encompasses several components: economic trends, commercial development, interest rates, and housing supply and demand make up the most influential ones. Just as markets can get hotter, they can also cool off. If you’re able to wait out a housing market downturn, it’s in your best interest to do so.

Although your home will continue to appreciate even if you don’t lift a finger, when the time comes to sell your negligence could hurt your home’s value. Keep your property from falling into disrepair with general maintenance. Things like painting, cleaning, and updated flooring might not seem like the sexiest improvements but they can increase your property’s listing price.