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Building Equity in Your Home

Equity can be a confusing part of homeownership. I want to help you understand what it means to have negative equity and provide you with tips to help you build equity.

Home equity is the difference between a home’s fair market value and the outstanding balance of all liens on the property. (How much is owed.)

Negative equity happens when the value of an asset falls below the outstanding balance on the loan used to purchase the asset. This often occurs when the economy starts to slow or home prices start to drop.

Here are some tips to help build your equity:

Mortgage Payments

  1. Lower your mortgage balance.
    Each time you make a payment, your mortgage balance decreases and your equity increases. As long as you’re making your payments on time, you’re building equity.
  2. Make larger mortgage payments. 
    If you can make larger payments with the extra amount applied to your principal, you will pay off your mortgage faster and gain equity more quickly.
  3. Make biweekly mortgage payments. 
    Making biweekly payments is the equivalent of 13 monthly payments instead of the typical 12 and will reduce your loan payoff time and increase your equity.

Home Improvements

Enhancing the size and quality of your home can increase its value and your equity. Some projects are much more beneficial than others. Traditionally, kitchen and bathroom renovations bring a much higher return on investment than leisure amenities such as pools or outdoor kitchens. If you have the budget to do a kitchen or bathroom renovation, then you can increase your equity.


A well-maintained home adds a lot of value and equity to your home when it comes time to sell.

Below are a few maintenance tips to keep in mind throughout the year:

  • Remove leaves and other debris from gutters and downspouts and ensure downspouts run off several feet away from your foundation.
  • Inspect your roof regularly for damage.
  • Check your driveway for cracks.
  • Have your heating and air conditioning systems serviced regularly.
  • Replace your air filters regularly.
  • Protect your home from insects and other pests to prevent damage to the interior and exterior of your home.
  • Trim trees and bushes so that they are not touching your home.

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