If you’re in financial trouble and you have a house, stay in it and don’t worry. With a house at your disposal, you’ll have equity waiting to be used.
According to FrandsenBank.com, the equity or the actual value of your home minus the mortgage (if applicable) is your last bargaining chip. With the right arrangement, it can be used to leverage dire financial situations of any kind.
But, if your home equity minus the active loan equals to zero or negative, it’s worthless. Learn how to raise your home equity so you’ll have a safety net when things don’t go your way.
Below are ways to do just that.
- Align Your House with the Tide. If your property currently has a $300,000 market value, it’s possible that it can double in five or 10 years’ time. Make sure you’re always on point with every property in your neighborhood. You don’t want to declare that your decade-old home is still priced the same, because you’ll be limiting your financial gains and capabilities.
- Pay Mortgage on Time. Every repayment you make raises the value of your property, and you gradually own the total value of your home. But, keep in mind that the reverse can happen if you fail to fulfill your dues.
- Make Large Batch Repayments. You can increase the equity of your property by making a huge mortgage payment before you use its equity. Since your debt ratio will offset, the perceived equity will be higher.
- Hasten the Terms. This can only work if your principal bank or lending institution allows for term changes midway. By shortening the terms and applying for quick refinancing, you cut a huge chunk off the hold of your principal mortgage.
- Reconstruction. With improvements in the curb appeal and the interior, your home’s market value will increase. This won’t affect your mortgage debt ratio as long as you take out a personal loan independently.
Raising the home equity is highly beneficial and personally rewarding. It’s a great way to prepare for the rainy days and ensure you have the proper countermeasures in place.