Building equity the right way

Equity is the value of your property, minus your mortgage. This should be an important part of your net worth.

I have always advised my adult children that when they sell a home, take all of the proceeds of the sale and put it all down on your next home.

Yes, we all are tempted buy that new TV and great sofa and then maybe a down payment on a new car with the cash before we put that equity down on another house.

Bad idea.

All of the preceding items: TV, sofa, car, depreciate rapidly. But your home should, if you have selected the greatest location and are in for the long haul, build equity over time and appreciate in value.

This is the safe way to buy.

I am not sure I would advise an equity line of credit for property improvements unless an equity line is the only way you can improve your property.

Taking funds each month from your own paycheck and gradually improving your home, paying for these improvements as you go, is a method of forced savings and building equity.

Taking any money you may get on a tax refund and placing this down on the principle balance of your mortgage is a method of paying off your home earlier than expected. Your home equity will build rapidly if you make this part of your normal financial plans.

What are the improvements that add to the value of your home?

One of the most important improvements is landscaping.

Enhancing the exterior appeal of your home entices people to want to look at your property.

Even if your home is not for sale, you and your neighbors will enjoy the look of a beautifully landscaped home.

Fruit-bearing trees are often a wise move, because freshly squeezed orange juice is something Northern buyers and visitors will love.

In most areas of Florida, a pool adds value to your home.

It does not always add the full cost of the pool, but you can enjoy that pool and know that buyers for Florida real estate, will typically, pay more for a pool home.

Normal maintenance is an absolute must for building and holding equity.

Homes depreciate rapidly if they are not cared for in every way.

Pest control and routine termite inspections are critical to safeguarding the integrity of your property.

Painting inside and outside, routine air conditioning servicing, maintenance of irrigation systems, and overall care of your home, is most important. Maintenance is the way to safeguard unnecessary depreciation.

Last but not least, if your earnings climb each year, those home-sale proceeds really help you move into a more expensive home and keep moving up.

Your equity will increase and your dream home will be a reality.