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How to Build Equity in Your Home Faster

Amanda Steele • May 04, 2020

Building equity in your home is an important thing to do if you are ever hoping to use your house as collateral to secure a loan. Equity can also be very beneficial when you sell your home, the more equity you have, the more money you will pocket. Equity is the amount of your homes worth that belongs to you.

If you own your home without a mortgage, then that means that you have complete equity. If you do have a mortgage, then your equity is the worth of your home minus the principle that you still owe your lender. The following are several tips that you can try to build equity faster.

A Bigger Down Payment

A bigger down payment not only means less principal to pay off, it also means less interest over time. For example, pretend you are buying a home for $150,000. You have a choice between a 10 percent or 20 percent down payment. A 20% down payment will cost $30,000 and start you off with $30,000 in equity. A 10% down payment will only cost you $15,000, but you will only start with $15,000 in equity.

Even though a higher down payment can end up saving you a lot of money, there are a few drawbacks. It is possible for your home's value to decrease. If that is the case, you’ll lose some of your equity. Additionally, that extra money spent can put a strain on your current resources.

A Shorter Mortgage Term

Mortgages are traditionally 30 years in length. If you want to build equity more quickly, then a shorter-term mortgage is a good option. You can choose a 20-year or 15-year mortgage. The benefits to these shorter mortgages is that you’ll pay lower interest rates and build equity in your home faster. The downside is that each mortgage payment will cost you more. So, take a look at your financial situation. If you can afford the shorter-term mortgage, it can end up saving you a lot of money in the long-term. If you’re not sure what you should be paying, using a mortgage calculator can help you figure out what your monthly payments would be.

House Hacking

Both of the above options are great for building fast equity, but they require more money to come out of your bank account. This option will help you build equity without using your own money. That’s right, with house hacking you can have someone else buy you a house. House hacking refers to the practice of renting out a portion of your home. You can rent out a room, or an entire basement if you have the space. This can earn you anywhere from $300–$1000 dollars a month depending on the amount of space you have. You can then take this extra income and put it towards paying off your home.

Build Additions

The three tips above, all focus on increasing equity by paying off your mortgage. This tip and the next are about increasing equity by increasing your home’s value. You can build additions to your home to increase its value, such as a deck. Add amenities to your deck that will make it a great outdoor gathering place during the summer. This will make your home much more appealing to potential buyers. Your equity will then increase by the amount that your home's value increases. Other additions that you could consider include, a larger garage, a sunroom, a guest house, or even a pool.

Renovations

You don’t have to build something new to increase your home's value, you could just focus on improving what you already have. If you have an older home, consider replacing the small windows with larger ones. Take a look at your kitchen. Is it small and cramped? If you can knock out a few walls to give some more space while upgrading appliances, you can really improve your homes worth.

While you’re at it, consider remodeling your bathroom. A modern look in the bathroom will give your home a much higher asking price if you’re looking to sell. At the very least, inspect your home for signs of disrepair and then fix it.

Advance Payments

If you’re blessed enough to have some extra cash, you can build equity by paying off your mortgage faster with advanced payments. An advanced payment will not only increase your equity, it will also help you save a lot of money on interest. For example, if you owed $120,000 on a 30 year mortgage with 4.5% interest, than you would pay $98,888 in interest over the 30 year period. If you pay just $25 extra dollars a month, you would pay off the mortgage in a little under 28 years and save $9,024 dollars on interest. If you can pay more, it gets even better.

Landscaping

If you look outside of your house, there are other things you can do to build your homes value and increase your equity. By revamping the landscaping around your home, you can give your home a beauty that will justify a higher price tag. Start with the lawn, it needs to be healthy and neatly trimmed and edged. Then consider adding plants such as bushes, trees, and flowers. Consider adding a water feature like a stream with a pond. If you don’t want something that in depth, you could add a fountain. These features can give your home a unique feel and help it stand out on the housing market.

Appraisal

If you’ve been doing a lot of work on your home, it’s important to get an appraisal done if you want to use your home as collateral for a loan. If you’re planning to sell your home, an appraisal can help you set the right price. During an appraisal, a licensed professional will come in and inspect your home. They will take note of all your homes features and then compare your home with similar homes in your area. Based on this, they can give you an official declaration of the worth of your home. If you’re selling, this can give you a good reference for your asking price. If you’re getting a loan, this will be an important document to include in your bank's loan application.

Your home can be one of your greatest assets if you manage it properly. The more equity that you have in your home, the more you will be able to do with it. Use these tips to build equity more quickly. Once you do, you can use a home equity loan to finance your future pursuits.

If you’re ready to buy a new home, contact us so we can help!

By Dotcom Design 21 Oct, 2022
It is a significant milestone to pick up where you are and move your whole life to a new location. Whether your profession requires it or your family circumstances necessitate that you have decided to move to Cedar Rapids, allow us to guide you as you embark on your new adventure. Below, we'll discuss everything you need to know about Cedar Rapids. We'll cover everything—from the city's neighborhoods, and school systems to the employment opportunities and recreational activities available within the city, so you can go into your move with the knowledge of what awaits you. Cedar Rapids, Iowa Cedar Rapids is one of Iowa's largest cities in America. It was originally named Rapids City after the Cedar River's rapids. Despite its industrial and cultural development, the city retains a sense of a peaceful town that makes you feel like settling down. Cedar Rapids is also known as a great place to raise a family. Many businesses fuel the economy of Cedar Rapids, ranging from agricultural-based manufacturing to electronics, telecommunications, and aviation. Almost every airline in the world uses Cedar Rapids-produced aircraft electronics. According to Expansion magazine, Cedar Rapids was placed #6 among the top 12 cities in the United States for business expansion. And according to Outlook magazine, Cedar Rapids is the second-best city in the country for overall quality of life. Climate Average temperature and humidity, yearly rainfall and snowfall, wind speeds, and other elements can influence your climatic preferences. In a typical year, Cedar Rapids experiences approximately 157 days with temperatures below 50 degrees Fahrenheit. Snow covers the ground for over 63 days a year, or 17.3 percent of the year. Imagine 7 consecutive days of mild rain per year. At Cedar Rapids, once summer and fall hit, it is very much appreciated. In the United States, sunrise and sunset hours differ by region. And according to studies, the length of each day and the amount of sunlight can have a major impact on people's moods. In Cedar Rapids, the shortest day lasts for 9 hours and 6 minutes. During this kind of day, you'll catch the sun rising at around 7:30 am, and set as early as 4:34 pm. However, during the longest day, you'll experience daytime for 15 hours and 13 minutes. The sun will rise at 5:30 am and will set at 8:46 pm. Community Cedar Rapids has a reputation for being a peaceful, middle-aged town ideal for raising a family. If you are in your early 20s however, note that it is slowly changing. Some of the younger people like you are flocking to the revitalized NewBo, Downtown, and Czech Village. Czech Village is a unique blend of residences and commerce with walkable streets located near the Downtown District. Much of the area has been occupied by the same families for numerous generations, giving it historical significance. Downtown Cedar Rapids is home to the city's banking, insurance, and telecommunications businesses, as well as cultural gems such as the Paramount Theater, Theater Cedar Rapids, and Cedar Rapids Symphony. Cost of Living Once you have an idea of what your home expenditures will be, consider how much groceries, petrol, utilities, and other expenses will cost in this new place. Because these costs can differ greatly from state to state, it's crucial to include them when calculating your new cost of living. Cedar Rapids is not only a cost-effective area to live and work, but it also has a lower cost of living than the national average. The sales tax rate is 7%. Vehicle purchase, maintenance, and gasoline prices are all on par with the national average. When compared to other places, the costs of groceries, clothing, drink, and communication are cheaper. Education prices are considerable, from preschool through college. The typical income of a Cedar Rapids local household is $66,227, which is slightly higher than the national average and similar to Midwestern cities. Furthermore, the median property price in the neighborhood is $106,560, making it very easy to find an affordable home. Transportation Cedar Rapids Transit has a large bus and cab system that provides service across the city as well as to the adjacent towns of Marion and Kawartha. From the downtown area, a network of 14 routes services the city. The Eastern Iowa Airport, which is a regional airport with connections to other regional and international airports, is Cedar Rapids' largest airport. Education The Cedar Rapids Community School District operates the public school system in Cedar Rapids, which is one of Iowa's largest school districts, with over 17,263 students enrolled in 24 elementary schools, 6 middle schools, and 4 high schools. In addition, the city is home to several institutions and universities. Cedar Rapids is home to COE College and Mount Mercy College, as well as Kaplan University and Upper Iowa University. The University of Iowa also offers an evening MBA program in the city. Employment Your career must follow you if you relocate. Job markets and prospects fluctuate from city to city, so if you don't already have work lined up, spend some time looking at different job advertising and employment sites to get a sense of the market before relocating. The grain processing industry is the city's main sector, employing over 4,000 people directly and supplying 8,000 other jobs. Cedar Rapids is renowned as one of the world's largest corn processing cities. Rockwell Collins, a Fortune 500 corporation situated in Cedar Rapids, employs about 8,700 employees and is the city's largest employer. Culture Marvin Cone, Grant Wood, Mauricio Lasansky, Malvina Hoffman sculptures, and regionalist art from the 1930s and 1940s are among the pieces on display at the Museum of Art. The Cedar Rapids Symphony Orchestra presents a four-concert series at the Paramount Theater for the Performing Arts. The Cedar Rapids Opera Theater opened in 1998 and has since staged productions such as Pirates of Penzance and La Traviata. Theater Cedar Rapids is one of the country's top 20 community theaters, with eight productions ranging from musicals to dramas. During July, Cedar Rapids hosts an 11-day Freedom Festival with 75 events for people of all ages. During the spring, the Marion Arts Festival brings together artists from all across the country. Live music, food vendors, and other family-friendly activities will also be available at the event. A 5k run/walk, cross-country skiing, ice skating, and vineyard tours are all part of WinterFest in January. Other ethnic and traditional cuisines can be found in addition to the classic Czech meals such as roast pig, sauerkraut, dumplings, goulash, and cabbage rolls. During the summer months, three farmer's markets provide locally grown fruits, vegetables, flowers, and baked items. Moving to Cedar Rapids? Whatever your motivation for moving to Cedar Rapids is, whether it's for a change of scenery or work, the city will entice you with its allure. If you're seeking to sell or buy a house , let Kari give you a free property evaluation and share her experience of the Iowa City and Cedar Rapids Metro area real estate market to help you find the home of your dreams!
By Multifuse Team 22 Jul, 2022
By Multifuse Team 20 Jul, 2022
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