How to Add Equity to Your Home

Home equity is the monetary value of a home minus the amount the owner still owes on the property. Equity usually increases over time. You can determine the amount of equity in a home by subtracting the balance on the mortgage from the current market value of the property. Equity can increase due to appreciation in a healthy economy, or when homeowners add additional funds to monthly mortgage payments or make improvements to the home and landscape.


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    Make extra payments on your mortgage.
    • Extra payments can include adding just a bit more than your current payment or adding a more substantial sum to your scheduled monthly payments. You can also sign up with your lender to pay half a mortgage payment every 2 weeks. This will add up to 1 extra mortgage payment a year.
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    Keep up maintenance on your home.
    • Complete needed repairs and update malfunctioning appliances. In a good housing market, a well kept home will appreciate in value.
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    Renovate your home.
    • Home improvements can increase equity by updating the look and functioning of your home. The return on investment (ROI) is the amount of money from the sale of your home you will get back in respect to the amount of money you paid to make the renovations.
    • Renovation projects with the highest ROI are kitchen and bathroom remodels. Family rooms, decks and windows also add equity to a home.
    • To get your money's worth out of a renovation, keep costs low by doing as much of the work yourself as you can. Choose simple as opposed to extravagant improvements. Remember to also focus attention on your home's landscape. Curb appeal can add 5 to 10 percent to the value of your property.


  • Any money that you pay over the monthly mortgage payment should be applied to the principal balance.
  • When remodeling, choose natural materials like hardwood floors, granite countertops and ceramic tile.
  • Expect the following ROI for specific renovations: kitchen remodel, 68.7 percent; bathroom remodel, 64.1 percent; Basement, 70 percent; new roof, 59.5 percent; deck, 72.8 percent.
  • Minor improvements can also add value to your home. You can painting walls, replace old faucets or light fixtures, and fix leaky ceilings on a limited budget.
  • Have a reasonable expectation of how much home improvements will add to the equity in your home. Don't overextend yourself performing costly renovations with a low ROI.


  • Property liabilities can decrease the value of your home. These liabilities include having a pool on the property, a bad roof, and lead paint, mold or asbestos in the structure. The lack of a 2-car garage can also decrease equity.

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Categories: Home Improvements and Repairs