Joseph Boyd's Blog
Buying your first home is a big decision; one that involves a lengthy process of saving money, building credit, and planning the next phase of your life. However, owning a home comes with one major payoff: home equity.
Simply put, home equity is the amount of your home that you’ve paid off. However, it does get more complicated when we bring in factors like the market value of your home and how it shifts over the years.
In this article, we’ll discuss home equity and what it means for you as a homeowner. This way, you’ll have a better idea of what to expect when you finally make that last payment on your home or when you decide to sell.
Home equity and market value
As I mentioned earlier, home equity is more than just the amount you’ve paid toward your mortgage. Like most markets, the housing market shifts over time.
Most homes slowly increase in value over time. In the real estate world, this increase in value is called appreciation.
However, that doesn’t mean that your home is simply going to increase in value indefinitely until you decide to sell. As you will find out (if you haven’t yet already), owning a home can be expensive. Houses age and require upgrades. If you fail to keep up with the maintenance of your home, its value can diminish.
How to build equity
The most important thing you can do to build equity is to make on-time payments to your mortgage. Making extra mortgage payments will help you build equity even faster.
One method of paying extra on your mortgage that many people are adopting is to make bi-weekly payments. Twenty-six bi-weekly payments comes out to 13 full payments per year, the equivalent of making one full extra monthly payment.
The second method of building equity is something that you have less control over: appreciation. However, if you stick to a maintenance schedule for your home and keep it in good repair, you’ll most likely benefit from appreciation over the lifespan of your mortgage.
What can I use home equity for?
The most common way to use home equity is as a down payment or full payment on your next home. First-time buyers who don’t have a 20% down payment saved often buy a starter home and then later upgrade as their family grows and their needs change. In the years that they own their first home, they build enough equity to make a full down payment on their second home, avoiding fees like mortgage insurance.
Many homeowners planning on retiring in the near future use their equity toward their retirement home, often turning a profit in the process. If you plan on downgrading for retirement and have fully paid off your mortgage, you can often use your equity to pay for your next home in cash.
Purchasing a home is a life-changing decision, and as such, should not be taken lightly. Fortunately, there are lots of things you can do to prepare for the homebuying journey, such as:
1. Determine Where You Want to Live
There is no shortage of high-quality houses available across the United States. Now, you just need to determine where you want to reside, and you can hone your house search accordingly.
Think about your long-term plans as you consider where you want to live. For instance, if you enjoy life in the big city, you may want to search for houses in or near the city of your choice. On the other hand, if you want to start a family in the near future, you may want to explore residences near parks and other family-friendly attractions.
Ultimately, it helps to narrow your home search to a few cities and towns. Because if you know where you want to live, you can quickly navigate the homebuying journey.
2. Establish a Budget
A budget is a must-have for any homebuyer, at any time. If you know how much you can spend on a house, you can search for residences that fall within your price range.
Oftentimes, it helps to meet with banks and credit unions before you launch a home search. These financial institutions can teach you about different types of mortgages. Then, you can select a mortgage that suits you perfectly.
Don't forget about home inspection, closing and other property buying fees, either. If you account for these property buying costs, you can ensure you have the necessary funds available to cover them.
3. Consult with a Real Estate Agent
A real estate agent is a difference-maker for a homebuyer. He or she is happy to teach a homebuyer about the ins and outs of the real estate market. As a result, a real estate agent will help you become a homebuying expert.
Typically, a real estate agent offers recommendations and insights throughout the homebuying journey. He or she first will learn about you and help you establish homebuying expectations. Next, a real estate agent will help you kick off a search for homes in your preferred cities and towns. When you find your dream residence, a real estate agent will help you craft a competitive offer to purchase this home. And if your offer to purchase is approved, a real estate agent will help you navigate the final stages of the homebuying journey.
Furthermore, a real estate agent can provide assistance any time a homebuyer has concerns or questions. A real estate agent strives to help you make informed homebuying decisions. Thus, he or she will do whatever it takes to educate you about the homebuying cycle and ensure you are ready to find and buy your ideal residence.
Simplify the process of finding your dream home – use the aforementioned tips, and you can prep for the homebuying journey.
There's a ton of cleaning and preparation involved in readying your home for resale. When you have pets, there are some extra steps you need to take to make sure your home is ready to be shown to prospective buyers. If you’re reselling without renovation—new carpets, wood flooring, etc.—you want to make sure you make your home as presentable as possible to help buyers envision themselves in it. What time and money should you invest to de-pet your home?
Walls and Doors
A clean freshly painted house goes a long way toward helping your home sale. Before you try to cover up any damage with a coat of paint, think again. Smart buyers look for damage all over the house and will see your feeble attempt at a cover-up as evidence that the home hasn't been taken care of. You will lose interest from excellent potential buyers who think the house likely has hidden issues that will crop up later. Take the time to fill in scratches and gashes to create a clean surface before painting. Check your walls, door frames, doors, and cabinetry for pet damage and mark all the areas that need attention, so you can get to work.
- First, start sanding. Using a sanding block or heavy grit sandpaper go over each area of damage to buff out the surface and make it as smooth as possible. If there are doors or door frames you want to stain instead of paint, it is especially necessary to take the time to minimize significant damage.
- Second, for areas that you will paint take spackle and fill in any gashes that you couldn't buff out all the way. Remember to let the spackle dry before your second round of sanding. Try using a blow dryer to hurry up the drying process, but it is always best to let the spackle dry naturally, to the time listed on the instructions, if you can spare the time. Don’t over spackle and make the drying and cleanup process longer for yourself. Just fill in the holes as needed using as little spackle as possible. When applying the spackle make sure you’re extending the coverage space slightly with each pass blending the repaired part with the rest of the surface you're restoring.
- Third, go over all the spackled areas with sandpaper again. You can start with the coarse paper and move to a less coarse paper for final smoothing. When you're satisfied that the gashes have filled and the surface is level you’re ready to clean and paint.
- Fourth, clean all surfaces with a damp cloth and clean up all dust and debris from the floor. Clean the entire wall or surface you’re going to paint so you can best gauge color match results. If you’re not painting the whole wall or door and are just going to touch up around the repair, you'll want to make sure the paint blends as well as possible. If a lot of sunlight hits the surface, your paint has probably faded a bit, and your new touch up could be glaring.
- Fifth (and last), paint. For best results prime the wall before you paint. Once your primer dries, you're ready to apply paint. Start with light coats and as with the spackle slowly fade the paint out from the repair over the rest of the surface. Let the first coat dry and check your color matching. If the repaired area is too glaring, consider painting the entire wall, door or cabinet for best results. Note: just because you repaint a bedroom wall doesn’t mean you have to repaint all of them. If you’re painting with the same color that is already on the walls the overall difference from one wall to the other won’t be noticeable if you paint the whole wall, instead of one spot alone.
With walls, door, and doorframes done, you're ready to move onto carpet and wood flooring. Check out part 2 and 3 of this series for more tips and instructions.
If you’re reselling and aren’t sure what repairs to make before selling ask your real estate agent for advice on where to invest your time and money before resale.
Sure, it's possible to find a home with a fully equipped exercise gym, an Olympic size swimming pool, or a couple tennis courts on the premises, but who wants to spend that kind of money! Fortunately, there are house features you can look for that will help you stay in shape without having to win the lottery first! Here are a few ideas to consider when searching for the ideal home:
- Proximity to a park: Whether you're looking for a home in the city or nearby suburbia, most communities have bike paths or public parks where you can walk, jog, inline skate, bicycle, take your dog for a stroll, or play tennis. Parks with playgrounds are also a great resource for keeping your kids entertained, physically active, and engaged. Having a park or walking trail located within a mile of your house is ideal because if it's convenient, you'll be more inclined to go there frequently. While it may not be at the top of your house-hunting "wish list," proximity to a park, nature preserve, or walking trail can be instrumental in helping you and your family stay healthier and more energetic. Doctor-approved, regular exercise is also a proven way to counteract the effects of stress, elevate your mood, and maintain a healthy weight.
- Pedestrian-friendly neighborhoods: One of the advantages of buying a home in a quiet neighborhood is that it offers a safe and relaxing environment for taking daily walks. Going for walks near your house can also be a good way to get to know your neighbors and check out the latest yard sales. Although sidewalks can be a nice feature for homeowners who enjoy neighborhood walks, quiet streets with mostly local traffic is all you really need for favorable walking conditions.
- A finished basement or extra room: The problem with putting an exercise machine in your bedroom or even the family room is that, sooner or later, you're going to get sick of looking at it! Until somebody creates a treadmill, exercise bicycle, or elliptical machine that has aesthetic appeal as well as functionality, it's never going to complement your decor! More often than not, exercise machines are an eyesore and a source of clutter. The solution is to create a dedicated exercise space in either a finished basement, a rec room, or a spare bedroom. Half of a two-car garage can sometimes provide a good area for weights and exercise machines, too, but that's only if you're willing to park your second car in the driveway.
Just because you’re not rolling in the dough doesn’t mean you can’t have a luxurious living room with a theatre-like experience. Upgrade your living room with these high-end updates that won’t break your bank:
If your home doesn’t have a built-in fireplace you can still replicate the classic focal point with an electric fireplace. Whether you are looking for one with a stone mantle or framed in wood you’ll have plenty of options to choose from no matter the size you need. The best part is these fireplaces are just as much functional as they are decorative and will keep you warm all winter long.
Here’s an upgrade the whole family will love - a new television. If it’s been a hot minute since you bought your television look for more up-to-date tech. A high definition and/or smart tv option will feel luxurious for certain. And of course, there is always the option to upgrade on size.
Install surround sound tv or a soundbar to bring your movie nights to a new level. Video games will feel more intense and movies immersive. With so many options on the market, it doesn’t have to be a huge hit to the wallet. For a true high end look for options that can either easily hide or blend in well with your existing decor.
Create a sleek tv center with a cord hider kit for your wall-mounted television. While this involves a little bit of tool know how to safely drill into the wall, it can be a quick weekend project. Alternatively, there are kits that allow you to hide the cords in a shallow tube without breaking out any power tools. With this option, you will want to make sure you have the paint color of your walls on hand to paint the tube to match.
Frame your flat screen tv for a chic and unique look. You can DIY this upgrade with some crown molding for a completely custom product. You can also find many tv covers that are much like shutters for your television. When closed they look like a tidy cabinet display.
Add molding around a plain bookcase to bring depth and class to the piece. Molding allows you to easily create a built-in look for a large entertainment center or a window seat flanked by bookshelves. The final product is 100% unique and created for your families needs and preferences.
A coat of paint can make all the difference. Whether it be the walls or just your side tables. For a luxe, high-end look reach for neutrals. To make a statement a vibrant, pop of color will feel chic and stylish. Creating a radical color change can make you feel like you have a whole new room without changing out all your decor.