Purchasing a home is an investment. As a homeowner, you invest in the equity of your home which is the current market value of a property and the balance of the outstanding loan you have on your property. If you ever decide to sell, the equity you have in your home can become instant cash. You increase your home’s equity by making additional payments, adding value and performing maintenance to add to its market value.
With most home loans, you are required to pay down the loan balance a little bit each month. The longer you are paying off your house loan, the more principle you pay. Even if you have a 30-year mortgage, you can speed up the process and have more of your payments go towards the equity in your home when you make additional payments. Everything you pay above your required monthly payment will reduce your debt and add to the equity you own in your home.
You can increase your curb appeal and add value to your home when you make home improvements. Investing in your home will increase its value significantly. For example, you can increase home value by remodeling your kitchen. Putting in new cabinets, flooring, countertops, and appliances add to the value of your home and make it enticing for future buyers. The cost to perform these remodels is significantly less than the value you add to your property.
Part of being a good homeowner is performing occasional home maintenance. Home maintenance includes making repairs to your roof, foundation, landscaping, and anything inside that is damaged or starting to wear. When you are persistent with your maintenance checks, the cost is much less than when you let problems develop, becoming costly down the road. When you do make repairs, you should choose things that add value and will also protect your investment. Flooring should waterproof and paint should be long lasting. Paying the minimal costs and performing preventative maintenance lets you put money back into your investment. The quality of your home will have increased value when you put work into keeping it structurally sound.
With the increasing demand and rise in home prices, your home’s equity increases each year. You continue to boost the equity in your home when you make additional payments on the outstanding loan, add value with remodels, and perform maintenance to keep the house in pristine condition. Treat your home like an investment by putting a little effort in to receive big dividends.
Read this next: 3 Ways Home Equity Can Have a Major Impact on Your Life