Skip to main content

Tips To Build Home Equity on Your New Home


4 Ways to Build Home Equity on Your New Home


It’s out there. Buying a new home is one of the most intriguing processes. There is too much thought which goes in when looking to buy a new home. When it comes to real estate, you are looking for a comfortable place to live, at the same time, it should also be a sound investment. Below are four tips so that you can build Home equity and do not end up underwaters on your new home.

Location


Be strategic about where you buy your new home. Do your homework on which areas are getting good appreciation in home values. Sure, you want to buy where population and amenities are growing, but you also need to understand what’s driving the local economy? Home prices mirror income levels! So, look for communities with mixed and expanding job base, where salaries are growing.

It is also possible that the home value may not appreciate as anticipated, but over a more significant period, it is much more likely to go up, if you have a good employment base. This would give you a unique benefit in terms of building good home equity over a period of time.

Buy a Fixer-Upper


You can always build in equity quicker by doing minor but smart renovations. So buy a house that needs some work. But make sure that you buy a home that needs a facelift and not a complete overhaul. It means you might get money out of a significant kitchen remodel but, you might get more money if the house just gets a new countertop and a coat of fresh paint and maybe some new appliances.

You might also want to look at some things that are not required like major mechanical system overhauls or maybe adding a room to it is going to be a considerable investment, but it is going to pay off big time. So smart and savvy investments in this fixer-upper may help you built home equity in no time.

Don't Buy the Best House on the Block


You could be bedazzled by the looks or the feature characteristics of a house which stands out from the other homes on the Block. Similar to why you should buy a house which is not in perfect condition, you don’t want to buy a house which is the biggest, best and most expensive house on the Block.

Putting in some old fashioned elbow grease is going to boost the value of the home much more when you are buying a modest home rather than one that is already the biggest and best. A lot depends on the kind of property you purchase, and the right property might help you gain more home equity in quick time.

Plan your stay in the property


Expect to stay put in the house for at least five years. You probably won’t profit or have built enough equity in your home if you own it for less than five years. Because it costs about ten percent of the sales price to move between the commission you pay, closing cost, fees and cost to move Itself.

If you think about it, your home has to grow up to at least ten percent in value just to break even. At a typical rate of inflation, that takes up to five to seven years. Longer you stay more equity you build. Eventually, enough to utilize it in the way you want.

Conclusion


Following the right ideas may get you to your optimum target. Selection of home is most critical of them all. There are many other ways to build home equity. These are just a few necessary steps you might want to consider before you finalize on your new home.

Once you have enough equity, the options for utilization of it are endless. You may invest it in real estate and take benefits of capital gains or use that equity in your home to pay off your high-interest debt.


Quicks Links


Comments

Popular posts from this blog

What is an Appraisal Contingency? — Best Guide for Homebuyers

  About Appraisal Contingency If a home is appraised for less than the purchase price included in the contract then there is a provision that is included in the purchase contract allowing homebuyers to back out of their contract this is termed as an  appraisal contingency  clause. Buyers who use financing to buy a house or are  buying homes  in areas where prices are volatile commonly use Appraisal contingencies. How do Appraisal Contingencies work? Purchase offers have appraisal contingencies inserted into them to notify the seller that the buyer intends to have the property appraised as part of their purchase for the financing process. If th e  property doesn’t appraise for the amount the buyer offered to pay then this contingency allows them the option of backing out of the contract without losing their earnest money deposit or facing other penalties. During an appraisal, a licensed professional is hired by the homebuyer to examine the property and evalu...

Public Feedback Requested By CFPB

  The Home Mortgage Disclosure Act underwent certain changes and to evaluate whether it is meeting the stated goals of detecting discrimination in mortgage lending the  Consumer Financial Protection Bureau  is seeking comments. The CFPB requests for assessment of the mortgage disclosure law and checks if it meets the objectives of the  Dodd-Frank Act . To abolish discrimination in mortgage lending in 1975 the Congress enacted . The bureau said the request comes after an August report found that mortgage lenders as compared to white applicants were charging higher interest rates and denying credit to Black and Hispanic applicants. The   bureau said that with this evaluation the CFPB will be able to maintain a fair, competitive, and non-discriminatory mortgage market. They added that the assessment is an opportunity for the Bureau to get an idea if the earlier HMDA rulemakings have improved upon the data collected, thereby reducing loans on financial institutions,...

What is Fannie Mae and Freddie Mac?

Understanding  Fannie Mae  And  Freddie Mac What is Fannie Mae and Freddie Mac? Fannie Mae or FNMA  is a nickname for Federal National Mortgage Association. It was established in 1938. It is a Government-sponsored Enterprise (GSE). In 1968, Fannie Mae ceased to exist as a government entity and became quasi-governmental, federally charted corporation to buy mortgages other than those insured by the Federal Housing Administration, otherwise known as FHA. Freddie Mac or FHLMC  is a nickname for Federal Home Loan Mortgage Corporation. Freddie Mac is also a government-sponsored enterprise (GSE) which was brought into existence in the year 1970 by the Congress. It provides competition to Fannie Mae and provides funds availability in the secondary mortgage market. What is Fannie Mae's and Freddie Mac's Role? Fannie Mae’s purpose is to create a secondary market for the purchase and sale of mortgages.  The secondary mortgage market ...

Ultimate Guide About Lease Option With Its Pros And Cons

  About Lease Options When you are looking to buy a home there are a lot of things that a buyer needs to be prepared with like a good credit score, down payment, and commitment to ownership. However, what if you don’t have a  credit score  that could qualify you for a mortgage? Or what if you don’t have enough money for the down payment to  purchase the property ? There is a way you can prepare to buy that home through the lease option. In this post, we will understand what is a lease option and how it works. What Is A Lease Option in Real Estate? A lease option is an agreement or a contract through which a tenant can purchase a property in the future based on today’s market price once the lease ends. A lease with the option to buy also gives the tenant / potential buyer time to build credit and save money for the down payment to buy the property. Once you enter into a lease option, it prevents the seller to accept any future orders from other buyers. A lease option ...