HOMEOWNERS | WAYS TO BUILD EQUITY
Equity is the percentage of market value that you own in your home. Your lender owns the rest and your goal should be to pay the lender’s share (the principal) down and build your share (equity) up.
You don’t need to go to extreme lengths to pay down your mortgage. Simply follow a few or all of these easy tips:
- Buy wisely: Buy as much home as you can without straining your resource, so you can occupy your home longer. Moving and closing costs eat away equity.
- Pay a little extra: Pay a little more every month toward reducing your principal. Use bonuses or cash back on your credit cards to apply to your mortgage. Making one extra payment a year may shorten your loan payoff by four years, saving you thousands of dollars in interest and time.
- Pay off other debts: Don’t incur new debt. Spend less on automobiles, dinners out and other expenses. Pay off credit cards with high interest rates, and then student loans. You’ll have more money available to pay toward your mortgage giving you additional financial freedom.
- Make improvements: Keeping your home updated and updated in turn helps preserve equity by making market value higher.
- Let time work for you: Think of your home as a savings account where the money you put in can be retrieved one day – with a return. Historically, homes have increased in value as much as three percent a year in normal markets which is a great way to build instant equity!
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