Buying a home is one of the biggest investments you will ever make. An FHA loan in New Jersey will help you make your dream of homeownership a reality and get you into a home you love.
Of course, once you are in the home, there is always maintenance work to be done. You will also want to do everything you can to increase your property value and build equity. While there is no exact science when it comes to building equity, there are some tried and true methods you can take toward doing so.
Let’s take a look at what you can do to build home equity both over time and immediately.
1. Make a Sizeable Down Payment
Since your home equity is representative of how much of your house you actually own, your aim should be to build as much equity as you can in a short period of time. One of the biggest and best ways to do this is right up front by making a large down payment.
The general standard suggests that homebuyers should aim to put down at least 20% of the price of their home. Doing so will help you avoid paying PMI (private mortgage insurance). If you can put down more than the suggested 20%, you will be in an even better position. Before you do this, however, take the time to evaluate your finances and your financial goals to make sure that you do not need that money somewhere else first.
While it is always great to put as much down upfront as you can, you can always make bigger payments in the future as your situation allows.
2. Make Paying Off Your Mortgage a Priority
Each time you make your monthly mortgage payments, you add equity to your home. Little by little, as you make monthly payments, your equity grows. Of course, the more quickly you can pay off that mortgage, the more quickly your equity will grow.
Find out how much your equity is growing by determining what percentage of your monthly payments are interest and what percentage of your payments are going toward the principal. The money going toward your principal is what builds up the equity over time.
You might be surprised how much of a dent you can make in your mortgage by paying bigger payments each month over the course of several years. Do what you can when you can and watch that equity grow as your mortgage shrinks.
3. Pay More Toward Your FHA Loan in New Jersey
Another great way to build up the equity in your home is to make bigger payments on your FHA loan in New Jersey or your standard loan. By paying more than your lender expects you to pay each month, you will be able to pay off your mortgage more quickly and, in so doing, grow equity more quickly.
Even if you are only able to make bigger payments a couple of times a year, this extra money will go to the principal of your loan, which could save you hundreds of dollars in interest if done regularly.
4. Refinance Your Home
Refinancing your home can provide another great way to build that equity. For example, if you refinance your 30-year mortgage to a 15-year mortgage, you will pay off your mortgage in half the time it would have taken. With your home paid off in half the time, you will have plenty of equity to enjoy that much more quickly.
Bear in mind that the ability to refinance your home is not guaranteed. You need to qualify for a refinance by having good credit and some equity already built up. The lender will also want to check out your debt-to-income ratio to make sure it is low enough to be considered. Check your credit ahead of time before applying to see if you can boost your credit score up a bit beforehand.
5. Make Worthwhile Renovations
You may be surprised just how much a home improvement project can boost your home’s overall property value. Many of these improvements do not even have to be expensive.
You might do something as simple as painting your walls with a fresh coat of paint. Perhaps you decide to replace old, dingey carpet. Simply swapping outdated light fixtures for something more modern can be a way to add value.
Boosting your curb appeal can go a long way as well. By adding new flowers to the front yard, installing new shutters, or painting your front door with a fresh coat of paint, you can do a lot to make your property more appealing.
A house is worth as much as a buyer is willing to pay for it. If someone is more attracted to your property because of these improvements, they will likely be open to paying more for the place.
6. Play the Waiting Game
Sometimes the most effective way to build your equity is to simply wait as your home’s value goes up on its own over time. Adjustments in the housing market often lead to an increase in property value.
This appreciation can boost your home’s equity as well. Of course, there is always a chance that your property value can decrease, but there is no guarantee. Therefore, all of these efforts combined can help.
Learn More About Loans and Building Your Equity
These tips will help you discover ways that you can grow equity in your home.
If you are shopping around for the right FHA loan in New Jersey, we encourage you to contact us to learn more. We offer a free quote to all our prospective clients. We are here to help you make your homeownership goals happen soon and look forward to working you.
7th Level Mortgage is a leading one-stop mortgage company providing deeply informed, custom-tailored assistance with every phase of each mortgage transaction. If you are searching for a home loan in New Jersey, Pennsylvania, Delaware, Maryland, New York, or Florida, please contact us today so that we can determine the best Mortgage Lender to place your loan with and get you the best possible rate and program.