There are two ways to increase the amount of equity in your home; decrease your mortgage debt or raise your property’s value. The overall goal is to grow the distance between what your home is worth and what you owe on it. As the difference between these two values grows, so does your equity.
Increasing equity by decreasing mortgage debt is an easy concept to grasp. Making additional payments on your mortgage and watching your equity build at a faster rate than it would by making only the regularly scheduled payment.
Investing in your home through home improvement projects is a good idea. Ensuring you spend your improvement dollars on projects, which have the capacity to pay you back, is an even better idea. Remodeling a bathroom, new siding, adding a stall on to the garage or building a deck, are projects which can change the look and feel of your home or maybe help us make better use of your living space. The question is what kind of return on the investment should you expect from a particular renovation or expansion project.
Investment Versus Value
It is a misconception to believe every dollar you spent on your home would increase its value by an equal amount. As important as it is to maintain your home and keep it updated to protect your investment, a home improvement project may or may not dramatically change the appraised value or the tax assessed value of your home. With that said, there are some improvements that tend to have a better return on investment than others. Kitchen remodels, a master bath and the addition of a garage tend to top the list.
Salability
When it comes to the ability to sell your home, there are a number of improvement projects that can enhance your homes curb appeal and increase your odds of getting it sold. It makes sense a deck or patio and landscaping fall into this category. Buyers are also attracted to the ‘maintenance free’ aspect of a home. Investing in siding, windows and doors which require little to no upkeep may have its benefits.
Whether you choose to pay down your mortgage or invest in improvement projects, building equity in your home it is the right answer.
