One of the most overlooked benefits of home ownership is what it forces homeowners to do. And that’s save money.
When you purchase your home, you are also getting into a forced savings account through home equity. The more time you spend living at home, the more money you will be able to save as you build home equity.
Home equity is the amount of money the home is worth minus the amount owed. With each mortgage payment, your equity goes up. The same occurs as the estimated value of your home increases.
If you want to speed up the growth of equity, follow these three simple tips.
Try to live on one salary
If it is an option, couples can accelerate payment on a mortgage (and immediately increase equity) through a little belt-tightening.
Living on one salary, and dedicating an entire salary toward the mortgage, can certainly help pay the mortgage down quickly. This extreme measure can be demanding, but also very rewarding.
Make home improvements
This is something you may do even if you aren’t trying to increase your home’s value.
Keep in mind that while many home improvement or remodeling projects will boost your home’s equity, not all do.
If you’re goal is to increase the home’s equity, smaller projects such as adding attic insulation or replacing a garage or entry way door, can do more to add value than you think.
Start big with a large down payment
Putting a down payment of at least 20 percent injects instant big-time equity into your home.
It also lets you skip on private mortgage insurance, which is money that can instead go toward loan repayment.
If you have additional assets, you may consider putting down even more than 20 percent. You can rest easy that your investment will be locked into your home, which may only increase as time passes.
As you think about purchasing a home and taking advantage of forced savings, we hope you’ll contact us for assistance. Our loan officers are well versed in today’s lending practices and trends. Our job is to put you into a program that will help you achieve your goals of homeownership and wealth building.