10 ways to increase the equity in your home

 

1. Rising home prices – when home prices rise, you will gain equity simply because your home will be worth more. For example, if your home is currently worth $100,000, if it rises to $125,000 in five years, you’ll have $25,000 more equity. Unfortunately, the opposite can also occur.
2. Falling mortgage balance – as you pay off your mortgage each month, you pay a portion of interest and a portion of principal.  Every time you make your mortgage payment you’ll gain some home equity.
3. Larger mortgage payments – if you make larger payments each month, the extra portion goes toward principal, you will pay off your mortgage much faster and gain home equity a lot quicker.
4. Biweekly mortgage payments – you can even go with a biweekly mortgage payment plan, where you make 26 payments throughout the year. This will shave down your mortgage term, save you a ton in interest, and help you build home equity a lot faster.
5. Shorten mortgage term – you can also refinance into a shorter-term mortgage with a lower mortgage rate, such as a 15-year fixed, which will increase the size of your payments, but build equity much faster than a traditional 30-year mortgage.
6. Avoid refinancing – conversely, if you don’t refinance and pull cash out, you’ll retain all the equity in your home. During the boom, many homeowners refinanced over and over until they sucked their equity dry.
7. Home improvements – if you make smart home improvements, where the expected value exceeds the cost, you’ll increase your home equity by having a home that’s worth more. While it’s seemingly completely played out, granite countertops and stainless steel appliances still draw buyers in, and you can sell for more.
8. Maintenance – keep your home in tip-top shape and you will be rewarded when it comes time to sell. If you can unload it for more as a result, you’ve essentially created more equity in your home.
9. Curb appeal – same goes for staging. Make your home look good when you list it and there’s a better chance it’ll sell, and sell for more. Simple things can make a big difference, such as new paint, carpet, bright lighting, cleanliness, plants, flowers, etc.
10. Bigger down payment – finally, you can make a larger down payment at the outset to automatically acquire home equity. While this may seem like you’re putting money in an illiquid investment, more equity means a lower loan-to-value ratio, which equates to a lower interest rate and easier-to-obtain financing. Over time, that lower rate will mean less interest paid and more equity accrued.

4 Reasons to Buy BEFORE Winter Hits

 

It's that time of year; the seasons are changing and with them bring thoughts of the upcoming holidays, family get-togethers, and planning for a new year. Those who are on the fence about whether now is the right time to buy don't have to look much farther to find four great reasons to consider buying a home now, instead of waiting.

 

1. Prices Will Continue to Rise

 The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released recently projects appreciation in home values over the next five years to be between 10.5% (most pessimistic) and 25.5% (most optimistic).
The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage are beginning to edge up and will continue to increase into next spring.  The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of next year.  An increase in rates will impact YOUR monthly mortgage payment.

3. Either Way You are Paying a Mortgage

As a recent paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.
But, what if they weren’t? Would you wait?
Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want to build equity in a home, orr you just want to have control over renovations, maybe it is time to buy.

Bottom Line

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Renting vs Buying - Simple infographic

Is it better to rent or buy a home? This is a question that everyone has to process through at some point in time. It’s not always best to buy and it’s certainly not always best to rent. A person’s lifestyle, financial situation, relational situation, and employment are all factors that can sway the answer to one side to the other.

 

 

Infographic courtesy of SpareFoot.com.

 

 

 

 

 

Hi! I'm Misty Metschke.  I'm a full-time REALTOR in Ames, Iowa. I enjoy working with first time home buyers and helping them decide if home ownership is right for them. Feel free to contact me directly with any comments or questions, or leave a comment below. Thanks!

Misty@MistyMetschke.com
(515) 451-3279