How to Regain Lost Home Equity
During the past few years, many people have watched their home's equity decrease as the housing market has been in decline. In areas where real estate made great gains over a short period of time, many homeowners are now finding themselves with little or no home equity. However, you're not helpless to the waves of market highs and lows. There are proactive measures you can take to regain lost home equity.
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Instructions
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Make home improvements. There are many that cost very little compared to the amount of value that can be added to your home. Such improvements are often called "sweat equity." These fixes include painting, landscaping, and updating decor, flooring or other items. More expensive improvements that add equity but require more cash include renovating bathrooms and kitchens, replacing windows and siding, replacing the roof, finishing the basement, or adding on to the property.
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Refinance to improve loan conditions. Perhaps you signed a long-term loan that makes payoff difficult. If you have an interest-only loan, or if you're only a year or two into a 30-year loan, consider refinancing to a shorter-term loan that is designed to help you pay the loan off more quickly. When interest rates are low, you may find that a 15-year loan is not much more expensive on a monthly basis. However, you'll find that you pay the loan down much more quickly. Every month, you'll be gaining equity.
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Make additional mortgage payments. Whenever you get a financial windfall, make an additional mortgage payment instead of spending the money on other things. When your tax return comes, pay down the principal on your mortgage. The investment will give you added financial security and valuable home equity.
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Tips & Warnings
Make a specific monetary goal to increase your home equity. For example, make a goal to pay $100 extra per month along with your normal mortgage. Attaining this type of goal will help you to realize that you have more control over your home equity than you thought you did.
