How to Increase Your Home Equity

Your home equity could be one of the most valuable financial assets that you have. For many people, it represents their only form of emergency funds. If an emergency situation comes up, you might need the equity in your home to get through the tough times. Therefore, building up your home equity is essential to your financial success. Here are a few ways to increase your home equity.

Bi-Weekly Mortgage Payment

Setting yourself up on a bi-weekly mortgage payment will increase your equity and pay off your house faster. By making a payment every two weeks instead of once a month, you are essentially adding an extra payment into every calendar year. It might not be a big difference in your monthly budget, but over the course of the mortgage, it will make a big difference in your equity. It makes such a big difference that if you never tap the equity in the house, your house will be paid off in 23 years instead of 30. Many mortgage companies offer this program for free. Even if you have to pay anything for it, it is usually a low one-time setup fee to get started. This option is definitely worth looking into if building equity is your main priority.

Make Lump Sum Payments

Many people decide to make a lump sum payment every now and then to add to the equity on their homes. For example, when you get your income tax refund, take a portion of it and just pay it towards the principal on the mortgage. While it might not seem like much, after a few years, this can really add up.


Updating your house can go a long way towards adding value and equity in your home. If your home is older and could use an update, you will be well served to give it the repairs that it needs. Try to focus on the more important areas of the house with the most of your budget. The kitchen, master bath, and exterior of the house are the most important parts of the house to create value. This is where the majority of buyers will look at your house and therefore, it creates a higher potential resale value for your home. Don't over improve the house compared to the rest of your neighborhood, but you need to make it look nice.

Add On

Adding on a room to your house can make a big difference in the value of the home. Although it can be expensive, adding on a room will give you the most return on your investment compared to any other type of change you could make to your house. When you add on a room, you are adding on square footage to the home, which is what creates value. When your house is valued, they will take the total square footage and multiply it by a price per square foot. If you have more square feet, you have more value and hence, more equity.

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