Home equity is a valuable asset that offers a pathway to financial empowerment when major financing is necessary. It’s important to understand how to build the equity in your home but also to then carefully consider if, and when is the right time to use it.
What is home equity?
Home equity is simply the difference between what you still owe on your mortgage and the current market value of your home. For example, if you took out a $850,000 mortgage on a house and you still have $350,000 left to pay off on it, it means you have $500,000 of equity. That simple!
As you start to pay off your mortgage, your property will start to gain substantial value, otherwise known as home equity. Your home equity will continue to rise with each installment.
The good thing is that you can then borrow against your home’s value, which can provide you with an opportunity to access large amounts of money. However, keep in mind that accessing your home’s equity would still be based on our normal lending criteria, including a thorough evaluation of factors such as your age, creditworthiness, income, and debt-to-income ratio.
How can I Build home equity?
Concentrate on paying off your mortgage by making extra payments if you can afford it. 13 or 14 mortgage payments a year is certainly better than just 12 payments. This will cut down the amount of interest you pay over the lifetime of your loan, while shaving off the amount of time it takes you to pay back the loan.
You can also pay more than your installment each month and this excess will be applied to your principal which will then reduce the amount you pay over time on your mortgage. Remember, every time you make a mortgage payment, part of your installment goes towards the loan principal and part goes towards your interest, thus building your Home Equity. When making payments, remember to advise the teller that your excess payment should be applied to the principal.
Home Improvements and renovations along with sprucing up your landscape are also great ways to increase the value of your home while enjoying your investment.
We believe that your financial needs can be met by ‘letting the equity in your home, work for you.’ At TTMB, you can tap into your real estate’s wealth to obtain finances for an investment, debt consolidation, emergency or even education through home equity mortgage financing with an interest rate of 6% and a repayment term of up to 30 years. To ensure you build equity however, you must pay your mortgage on time every month and ensure that your property is well maintained.
