You've probably heard that one of the benefits of owning a home is that you can build equity in it and tap into that equity to help pay for expenses. But what exactly is equity?
Here's a look at the basics of how home equity works and why it's so valuable.
Equity is your financial investment in your home. Generally, equity is the difference between the appraised value of your home and the amount you still owe on your mortgage.
There are three ways your equity increases. No matter how you are gaining equity, more is always better.
- As you pay on your mortgage, the amount of equity in your home will rise. When you make a payment, part of it goes towards the principal. The principal is what builds your equity. Adding extra each month to principal helps build equity.
- Equity increases with market appreciation. As long as housing market conditions are healthy, your home’s value should appreciate over time. Of course, how much equity you’ll gain, or lose, depends on the timing of your purchase versus the current state of the market.
- Your equity will also increase if the value of your home jumps. An easy way to do that is with home improvements. Some of the most popular home improvements include minor kitchen remodels, bathroom remodels, and finishing basements. You can’t always expect to get a 100% return on your home improvement but you can come close. This is where we come in. We can help find the right Service Pro to help you complete updates or repairs to your home before you put it on the market and help build your equity!
The more equity you have, the more credit will be available to improve your home and sell it for more. At HouseAmp, we can help streamline this process for you. Our goal is to help you add equity to your home, which will then help you to get the most money from the sale of your home.
Contact us to get started!