Building equity in your home is one of the best ways to increase your financial security. Whether you’re planning to sell in the future, refinance, or simply want to maximize your investment, growing your home’s equity can provide major financial benefits.

At Brennan Bynum Realty, we help homeowners make smart real estate decisions. In this guide, we’ll cover what home equity is, why it matters, and practical strategies to build it faster.

What Is Home Equity & Why Is It Important?

Home equity is the difference between your home’s market value and what you owe on your mortgage.

How to Calculate Your Home Equity:

💰 Current Home Value – Remaining Mortgage Balance = Your Equity

For example:

• If your home is worth $400,000 and you owe $250,000, your home equity is $150,000.
• As you pay down your mortgage and home values rise, your equity grows.

✅ Why Home Equity Matters:

• Helps you build wealth over time.
• Can be used for home improvements, investments, or emergency funds.
• Allows you to refinance at better rates or borrow against your home (HELOCs & cash-out refinances).
• Increases your profit when selling your home.

Now, let’s look at how you can build equity faster.

1. Make Extra Mortgage Payments

The fastest way to increase equity is by paying down your mortgage faster.

Ways to Pay Off Your Loan Sooner:

✔ Make Biweekly Payments – Instead of one monthly payment, split it into two smaller payments every two weeks. This results in one extra full mortgage payment per year, reducing your loan balance faster.
✔ Round Up Your Payments – If your monthly mortgage is $1,450, consider paying $1,500 or $1,600 to chip away at the principal.
✔ Make Lump-Sum Payments – Use bonuses, tax refunds, or extra income to make additional principal payments.
✔ Refinance to a Shorter Loan Term – Switching from a 30-year loan to a 15-year mortgage will help you build equity twice as fast.

📌 Pro Tip: Before making extra payments, check with your lender to ensure there are no prepayment penalties.

2. Increase Your Home’s Value with Smart Renovations

Investing in home improvements can increase your property’s market value, which boosts equity.

Best Renovations to Build Equity:

🔹 Kitchen Upgrades – New countertops, modern appliances, and fresh cabinets can add significant value.
🔹 Bathroom Remodels – Updating fixtures, flooring, and vanities provides a strong return on investment.
🔹 Adding Livable Space – Converting basements, attics, or garages into usable rooms increases home value.
🔹 Curb Appeal Enhancements – A well-maintained landscape, new siding, and fresh paint can boost home equity instantly.
🔹 Energy-Efficient Upgrades – Installing solar panels, energy-efficient windows, and smart thermostats can make your home more valuable and lower utility bills.

📌 Pro Tip: Not all renovations add equal value. Focus on high-ROI projects that offer the best return when selling.

3. Make a Larger Down Payment

If you’re buying a new home, making a larger down payment upfront instantly gives you more equity from day one.

💰 Example:

• If you buy a $350,000 home and put 10% down ($35,000), your mortgage balance is $315,000, and your starting equity is $35,000.
• But if you put 20% down ($70,000), your mortgage is only $280,000, giving you $70,000 in equity right away.

Bonus: A larger down payment also lowers your monthly mortgage and may help you avoid private mortgage insurance (PMI).

4. Avoid Cash-Out Refinancing & HELOCs

Home equity loans (HELOCs) and cash-out refinances allow you to borrow against your equity, but they reduce your ownership stake in your home.

🚫 To build equity faster, avoid:

• Frequent cash-out refinances that add to your mortgage balance.
• Using a HELOC for non-essential purchases (vacations, new cars, etc.).
• Taking on second mortgages unless absolutely necessary.

📌 Pro Tip: Only tap into home equity for investments that increase your home’s value—like renovations or real estate investments.

5. Stay in Your Home Longer

The longer you own your home, the more equity you build.

🏡 Why?
✔ Real estate generally appreciates over time.
✔ More mortgage payments = a lower loan balance.
✔ Homes in growing markets increase in value faster.

📌 Pro Tip: If home values in your area are rising, holding onto your property allows you to maximize appreciation gains.

6. Keep Up with Home Maintenance

Neglecting repairs and upkeep can hurt your home’s value, reducing equity growth.

Simple Maintenance Tasks to Protect Equity:

✔ Fix roof leaks, plumbing issues, and HVAC problems early.
✔ Repaint your home’s exterior and maintain landscaping.
✔ Keep gutters clean and foundation in good condition.
✔ Upgrade appliances and fixtures before they become outdated.

A well-maintained home retains strong market value, helping you build equity naturally.

Final Thoughts: Take Control of Your Home Equity

Building home equity isn’t just about paying off your mortgage—it’s about making smart financial and home improvement decisions.

✔ Pay down your mortgage faster with extra payments.
✔ Invest in high-ROI renovations to increase value.
✔ Make a larger down payment when buying a home.
✔ Avoid tapping into home equity unnecessarily.
✔ Stay in your home longer to benefit from appreciation.
✔ Maintain your home properly to preserve its value.

Looking to buy, sell, or invest in a home? Brennan Bynum Realty is here to help you make smart real estate moves that grow your wealth over time.