Do you know that just by owning a home, you are significantly wealthier than someone who makes the same but is renting? This is because any money you pay for your mortgage goes towards increasing the value of your home equity. Your home equity is essentially your deposit or ‘forced savings’ in the form of real estate. Once you’ve paid off your mortgage, then you have a huge nest egg or savings that you can access using home equity loans when needed. Yes! You can access your home equity without having to sell your home!
Once homeowners become aware of how rich they are through their home equity, a lot of them get tempted with accessing their home equity via a loan. Note that while it is smart to use home equity for investments, improving one’s financial status, consolidating loans, and funding home renovation projects, some uses for home equity is not as smart as other uses because they don’t add value to the home, yourself, or overall financial status. It is better to be careful than sorry. Now that we’ve got this part covered, how does one get rich with home equity? Find out below!
Try Not to Move Often
Buying and selling homes come with costs. If you move houses every few years, the cost can quickly add up. By not moving too often, you save money that you can towards paying off your mortgage and therefore increasing your home equity.
Choose an Equity-Rich Home
An equity-rich home is a home that has a huge potential to increase value after a bit of improvement or one that is located in a sought-after neighbourhood with increasing property prices. An equity-rich home will allow you to grow home equity fast and for much less money, time, and effort.
Plan Improvements Wisely
There are home improvements that are nice to have and some that really make your home more desirable and valuable. You’ll have to learn to differentiate and try not to go overboard with customizations. A home with extra functionality but has room for more has more value than an overly-customized home that nobody else wants because buyers feel like they are intruding.
All About the Location
Choosing a home location isn’t just about convenience but also planning for the future. If you can, move into a neighbourhood that has better long-term forecast than another that you might really like. It is also best to choose a home in a location that can accommodate your changing needs down the road so you won’t have to move again after just a few years.
Look Forward to Being Equity-Rich
There is nothing wrong with wanting to increase your home equity and planning accordingly. There is nothing wrong with treating your home equity as a timed savings account that you can use later such as when you plan to retire. It is great to be equity-rich because you will have much more financial room for maneuvering should the need arise.
Do you need more ideas about increasing your home equity? Or do you want to use your existing equity to further boost your home’s value? Whatever you may have in mind, we can help! Contact us at Mortgage Central Canada and we’ll surely answer your questions to assist you towards better financial decisions.