Let's Talk The Triangle

How quickly can I increase my equity enough and move up?

– Eleonore

This is a tough question to answer without more information. To increase equity, you can do one of several things.

1. You could immediately put more money towards the principle so that you have more equity whenever you sell your home. How much you put aside is determined by each homeowner’s financial situation. This would also reduce the number of payments by reducing the amount that the interest is based on.

2. You can also look for improvements that you can do to your home. Start with updating an out-of-date kitchen or master bath. Those offer the best return on a homeowner’s investment in the renovation.

3. You could also look at finishing an unfinished walk-up attic or walk-out basement. In today’s competitive marketplace, you’ll get better prices from general contractors because they are in great need of jobs and are willing to cut deals to keep their employees and/or themselves busy while waiting for business to pick up. When it does pick up, and it will, your chances of getting a great deal go down.

4. You could also look at landscaping. The front view of your home is the first thing most buyers are going to see when they come for a personal tour. So make a positive impression from the very beginning. A few well-placed shrubs and trees and seasonal flowers can greatly help you to make a very strong and positive first impression. All of these things require money and a period of time for the work to be done.

5. Obviously, you could do relatively simple and inexpensive improvements such as repainting walls, power washing exterior surfaces like stone, brick or siding. You could also look are refinishing bath and kitchen cabinets rather than a complete redo. And you could look at refinishing or replacing old wood flooring, tile, vinyl and carpet to give your home a fresh, updated look without a huge investment. In the end, the number of improvements you make will be based on the need for them and your budget.

6. You have to look at the relative value to you as an equity builder versus the cost and effort. If you have flexibility, then you can make the improvements, enjoy them for a while and wait out this “buyer’s market.” You’ll gain more equity and have the enjoyment that goes with living in your home “after” you’ve made the improvements.

7. A final way to improve your equity quickly is to see if you can reduce the mortgage interest rate you are paying. For example, I just reduced my interest rate from 5.54% to 4.875% on a $325,000 mortgage. That brought my monthly payments down by almost $500. I could turn around and put those monthly savings toward my principle, therefore increasing my equity at the time of sale.