How to Build Equity in Your Home Fast

For most people, their home will be the biggest investment they ever make. Follow these steps to build equity in your home FAST.

Instructions

1. ADD AN EXTRA AMOUNT TO YOUR MONTHLY HOUSE PAYMENT

   You can build equity surprisingly fast just by adding an additional amount to your house payment each month. Even adding 10% can make a big difference.

2. DIVIDE YOUR PAYMENT IN TWO

   Rather than making one house payment per month, divide the amount in two and make that payment every two weeks. The result is an extra house payment each year.

   For budgeting purposes, this works especially well if you're paid on a bi-weekly schedule. Just budget half of your mortgage payment with each paycheck.

3. MAKE AN EXTRA PAYMENT EACH YEAR

   If you're not paid bi-weekly, it may be difficult to make a payment every two weeks. But by setting aside 1/12 of your payment in a separate account each month, you will have enough money at the end of the year to make an additional house payment.

4. GET RID OF PMI

   If you bought your house with less than 20% down, you might be paying Private Mortgage Insurance on your home loan.

   Get to 20% equity as quickly as possible and then check with your lender about getting the PMI removed. Continue, however, to make the PMI payment amount as an extra payment toward your mortgage.

5. MAKE SMART IMPROVEMENTS TO YOUR HOME

   When considering home repairs and improvements, research those that will add the most value to your house. Kitchen and bathroom improvements are a good place to start.

   This information can vary by region so you may want to seek the advice of a realtor or home appraiser in your area.

Tips & Warnings

• Never pay a bank or company to set you up on a bi-weekly payment plan. You can usually do that yourself, for free, by utilizing the steps above.

• Before making extra mortgage payments, check with your lender to make sure there are no prepayment penalties.