There are a number of ways you can build your home’s equity.
Make a big down payment: The fastest way to build equity is by making a bigger down payment. The bigger your down payment, the more equity you’ll own right away. For example, if your home costs $100,000 and you made a $10,000 down payment, you’ll have $10,000 in equity. Instead, you could pay $20,000 down and get $20,000 in equity right away. Of course, make sure you’re staying within your budget, and get preapproved for a mortgage so you’ll know how much you’ll have to save beforehand.
Pay off your mortgage: A portion of each of your mortgage payments goes towards your principal balance of your home loan, and the rest usually pays for interest, property taxes and insurance. At the beginning, a smaller portion goes toward reducing you principal balance and a bigger amount goes toward your interest. However, the longer you have your mortgage will result in more money going towards the reduction of your principal balance and building your equity. Unfortunately not all loans work this way, so weigh all your options before you select your loan.
Pay more than the minimum: Another quick way of building equity is paying more on your monthly mortgage payments. Even if you’re paying an extra $100 a month or making an extra payment each year, you’ll chip away at your mortgage and increase your equity at a faster rate.
Live in your home for 5+ years: Equity increases if your home’s value increases, but there’s no guarantee that the price will jump. However, your odds will increase if you live in your house for five years or more, so plan on living there for that time if you want to see a value jump that will gain you more equity.
Curb appeal and renovation: You can boost your home’s value by renovating outdated rooms and appliances or adding new rooms. You can also improve your yard by adding more plants or trees to help boost your home’s curb appeal.