How To Boost Equity In Your Home

Written by Posted On Friday, 27 February 2015 05:29

Your home is likely your biggest investment, and you want to ensure that you made a smart investment by ensuring that there is always a decent amount of equity in your home.

Home equity refers to the market value of the home minus any home loan balance. For example, if the fair market value for your home is currently $250,000, and you have $150,000 balance on your home loan, then you currently have $100,000 in equity in your home.

To some people, home equity is extremely important when it comes to having extra money at their disposal. If you have a big upcoming purchase, or if you want to remodel your home, you can always take out a home equity loan instead of a traditional loan. Most banks will allow you to take out up to 75 percent of the equity in your home, so if you had $100,000 worth of equity, you could take out a $75,000 loan. This $75,000 would then be rolled into your mortgage.

While a home equity loan is nice, some people don’t really care about equity until it comes time to sell their home. Obviously, everyone would like to profit on the sale of their home, and having equity in your home means that you could walk away with a nice profit. You can then use this profit as a down payment on another home, or you can use it for whatever else you wish.

So how exactly do you boost the equity in your home?

Enhance the curb appeal.
When it comes to boosting equity, some people fail to look at the outside of the home, but this is important. While you don’t have to spend thousands of dollars completely changing the outside of your home, putting a little elbow grease in can make your home worth more. For example, consider washing dirty siding or adding a new coat of paint to the house. Make sure you cut your grass, and even planting flowers can help add some nice curb appeal. If you have anything broken around the outside of your home, such as a broken railing on the porch or a chipped driveway, fix these issues too. This will help boost equity.

Upgrade dated rooms.
If you want to get the most out of your home, you need to upgrade it as much as you possibly can. If you have an extremely dated kitchen, completing a kitchen renovation will help boost the equity in your home. Bathrooms and kitchens will give you the most money for your return, but it’s still important to be smart about your upgrades.

For example, if you want to increase equity in your home, then you need to stick to neutral and current designs. Choosing the right kitchen cabinetry, counter tops, and appliances will go a long way when it comes to getting money out of your house. If you make the wrong choice, or are aiming your renovation at a niche market, then you may not see the same type of return.

If you’re not sure what to do, you can ask your realtor for advice, as they will be able to tell you what the current trends are and what type of equity increase you could see if you completed the project based on current market conditions.

Create a healthy home.
Making investments that will help create a healthy home can also have a nice impact on your home’s equity. A healthy home environment is intrinsically tied to real estate value, so determine what you can do to boost the value. For example, adding in a Wave Home Solutions water purifier, air purifier, or home ventilation system can improve air and water quality in the home.  This is extremely attractive to people who are not only health-conscious, but who also may suffer from certain health conditions, such as allergies or asthma.

Update the essentials.
While many people focus on bathrooms and kitchens, there are other areas of your home that need to be updated in order to boost equity. For example, upgrading your water heater, air conditioning unit, furnace, roof, and windows will create a nice boost in equity. These are items that are needed to keep your home running properly, and they are something that will add a significant increase to your home’s equity if you fulfill.

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Ashley Mills

This is Ashley a blogger and independent freelance journalist. Working as an independent media consultant since 2006. I've contributed a lot of news articles, ideas, inventions and more on various online weblogs.

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