What is Home Equity?
Home equity is the portion of your home that you’ve paid off. It’s the difference between what the home is worth and how much is still owed on your mortgage. If you owe $150,000 on your mortgage loan and your home is worth $200,000, you have $50,000 of equity in your home.
A house’s equity fluctuates as more mortgage payments are made and the property’s current value is affected by market forces. Home equity is an asset you can use to pay off high-cost debt or to pay for your child’s college tuition.
How to Build Equity in Your Home and Increase Its Value?
You can build equity in your home by making sure you’re paying down your mortgage and living within your means. When you make a consistent effort to pay down your mortgage balance, you’ll be able to sell your home for more than its original value.
There are many reasons to build equity in your home and increase its value. The most important reason is that it will help you achieve financial independence. If you want to take a loan for the purpose of buying a car or purchasing a house, then having adequate equity in your home will go a long way in helping you get it approved by the bank.
It also provides peace of mind because if something happens to your house then you will not have to worry about paying off the mortgage or getting stuck with someone else’s debt. You will be able to sell the property at any time without worrying about owing money on it because it has built up enough equity to cover all costs associated with selling.
Top 5 Home Improvement to Increase Home Equity
- Kitchen Remodelling
Have you ever noticed everyone gravitates toward the kitchen during a dinner party? It’s known as the heart of the house for a good reason. The draw of your kitchen to party-goers has the same value to potential buyers, so a kitchen remodel is one of the best ways to add value to your house.
An updated kitchen appeals to a buyer’s emotions and a homeowner’s wallet because, if done correctly, it can give you close to a 100 percent return on your investment. Plenty of counter and cabinet space is a must, and granite countertops are popular with buyers.
Stainless steel appliances are also a hot ticket, but the most important thing is to make sure your appliances all coordinate. A window over the kitchen sink is a great place to daydream away your dishpan hands. Island counters are wonderful additions if your kitchen has the space. They not only provide additional counter space but can also be used for homework, grabbing a quick bite, or a place for guests to hang out while you cook.
- Renovate Your Bathrooms
If you have ever lived in a house with only one bathroom, then you know how valuable these rooms can be to potential buyers. Upgrading your bathroom, especially the master bath, will make a big difference in the value of your house.
Master suites with his and her sinks, spacious showers, and plenty of square footage are what most buyers want. Added amenities such as heated floors, steam showers, and whirlpool tubs will serve you well, and ample storage is a must.
Keep your design in the same period as the rest of your house. You can still have modern amenities while retaining a classic look. Don’t be shy about spending money on your bathroom remodel because it can return a huge portion of your investment.
- Reinvent Your Basement
Why not add a room to your home if you already have an empty space downstairs?
Basements can easily be transformed into recreation rooms, bar rooms, media rooms, or “man caves,” not to mention extra bedrooms or rental units, if there’s a separate entrance — and they bring in more money when you eventually sell. But don’t just rush downstairs and start hammering away. Take a moment to plan your attack!
It’s important to make sure your basement remodel includes a bathroom, as the presence of a bathroom can dramatically increase its value. Also, try to avoid adding a lot of walls or hallways, which will make the area feel smaller and darker — basements already tend to feel that way. And don’t forget to add storage space!
Homeowners don’t always give much thought to their landscaping, but a well-designed landscape can add significantly to the value of your home — sometimes as much as a new kitchen or bath.
Have a landscape architect assess your property and offer suggestions for improvement. Perhaps creating a more formal look will better match your home’s style (think geometrical shapes and straight lines), or, if your lot backs up to lots of trees, a woodland look full of natural paths, native plants, and lots of ground cover.
- Curb Appeal
If your house doesn’t look appealing from the outside, it will be difficult to attract potential buyers. A good first impression can add five to 10 percent to the value of your home. If your house’s exterior color is dated or faded, painting is a good place to start improving it.
Choose colors and exterior details that match the period of your house. Shutters add charm and depth, but not if they’re hanging crooked or flaking paint. Paving a driveway or walkway that is in disrepair is essential because this is what people see when they first approach your home — you want it to be welcoming.
The Bottom Line
The best way to make your home more valuable is to invest in renovations because they can add value to your property and give you a head start on building your home’s equity. We hope these home improvement ideas we have provided will help you get the most increase in home equity.
At the end of the day, we believe that home improvement is not just about improving your home’s value. It’s also about improving your quality of life!
If you’re looking for more advice on how to make your home more valuable, check out our other articles. For any questions or concerns, please feel free to contact us. Kura Home is always happy to help!