How Your Home Equity Can Grow Over Time

Dated: July 12 2022

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Home equity is the value of your home after you’ve paid off your mortgage and other home loans. Depending on where you live, home equity can be a substantial asset that can be used to purchase another property or as collateral for securing a loan. Whether you’re planning to sell your home in the future or simply want to grow your wealth, it’s important to understand how your equity grows over time. Home equity also has different tax implications depending on its use and where you live. Below are some strategies that can help you increase the amount of equity in your home. Read on to learn more.

Paying Off Your Mortgage

The first and most obvious way to increase your home equity is to pay off your mortgage. The sooner you pay off your mortgage, the more equity you can put in your home. After all, your home equity is simply the value of your home minus the amount you still owe on your mortgage. There are a few ways you can speed up the process of paying off your mortgage, including setting up automatic payments, increasing your monthly payment, or finding a way to make some extra money. While it can be tempting to use home equity as an additional source of income, doing so can come with serious drawbacks. Keeping your mortgage low can have a big impact on your home equity. For example, homeowners who have a $200,000 mortgage at 3% have a total monthly payment of $1,166. At 5%, their monthly payment jumps to $1,442. That’s a difference of $276 per month, or $3,404 per year. While it’s not a huge amount, it’s certainly something you could put to good use.

Equity Through Real Estate Appraisals

When you borrow against your home equity, you’ll need to get a real estate appraisal to determine the current value of your home. If your home has increased in value, that’s great news. You’ll be able to borrow against that equity to make home improvements, pay off other debts, or simply use it as an additional source of income. As with borrowing from your home equity through a mortgage, though, you’ll need to make sure the value of your home still exceeds the amount you owe. Otherwise, you could end up with a shortfall that you’re responsible for repaying. If you’re planning to get a second mortgage, you’ll want to make sure your home appraisal is accurate. As your home appreciates, the amount you’re able to borrow is likely to increase as well.

Home Improvement Strategies

If you want to increase your home’s value, the best way is to improve its condition. The more improvements you make to your home, the more you can borrow against its equity. Whether you’re renovating your kitchen or adding an addition to your home, every improvement is likely to increase the value of your home — and your home equity. You can also increase your home equity by making improvements to your neighborhood. Doing so can help to boost the value of your home and those homes around you, so it’s a win for everyone. There are a few things you can do, including: - Join your neighborhood association. - Support neighborhood events and activities. - Get involved in activities like gardening and clean-up days. - Offer to help with landscaping and other improvement projects.

Equity Through Refinancing

If your home is worth more than when you first bought it, refinancing can be a good way to access that equity. You’d refinance by taking out a new loan against your home’s current equity. As with other forms of borrowing against your home, you’d need to get a new appraisal to determine your home’s current value. While refinancing is a good way to access home equity, it might not be the best option for everyone. If interest rates rise, for example, you could end up paying more in interest. That can make refinancing less attractive, particularly if you’re looking to use the money to pay off existing debt.


The value of your home can change over time, depending on a number of factors. When you own a home, it’s important to stay on top of maintenance and improvements to help it grow in value. If you want to increase your home equity, there are several things you can do, including paying off your mortgage, making improvements, and refinancing.

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Nick Hailey

Nick is the Founder and CEO of Black Castle Properties. He is also a Licensed Real Estate Broker with over 9 years of experience and an extensive background in sales. He understands the complexities o....

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