Tips for Raising Home Equity

house and piggy bank

Within the mortgage world, “equity” is a term you’ll hear a lot. In simple terms, it refers to the difference between your home’s value and how much you owe on your mortgage. As such, as you pay your home loan balance and the house appreciates in value, you tend to gain equity over time.

The more equity you have in a home, the greater your options. You can use equity as a future nest egg, or cash to put on your next home – many people even receive a home equity loan to help with other debts or financial needs. At Altius Mortgage and our partners at Mortgage Ogden, our brokers are here to help you build as much equity as possible in your home. Here are some tips, both for before you sign a mortgage and after.

Pay More Principal

If your home is appreciating slowly, you can build equity by paying down your home loan quicker. An extra mortgage payment can make a huge difference in equity, and toward paying off the home – consider that a single extra payment per year can put you seven or eight years ahead of schedule. If you can find the funds in your budget – some people use a tax refund or a work bonus, or make the “extra” payment by adding a small amount to each month instead – this is one of the fastest ways to build equity.

Look to Shorter Terms

Many people automatically look to 30-yer mortgage plans, thinking the 15-year plans are out of their budget. But they’re often much closer together in mortgage rates than you might think – a 15-year term rarely, if ever, actually doubles your payments. If you can afford larger payments in the short term, think seriously about a shorter loan period.

Larger Down Payment

If you have great credit, your down payment could be as low as 3.5 percent for some loan. To build equity faster, though, consider putting down a larger amount, up to the traditional 20 percent.

Home Improvement

Home improvements can add significantly more value to the home than you’re actually spending in many cases. Upgrades in the kitchen and bathroom are particularly valuable, as are garage doors, windows and outdoor landscaping concerns. An investment of between $400 and $500 to a basic home improvement can often bring a return four times that size.

Want to learn more about building equity in a home, or any of our mortgage services? Speak to the brokers at Altius Mortgage today.

Avoiding Common Reverse Mortgage Pitfalls

elderly couple looking at laptop

For seniors who have equity in a prior home loan, reverse mortgages are growing in popularity. These are loans for seniors at least 62 years of age, and allow them to pay no monthly payments until they pass away or move out of the home – in fact, many people actually receive money from a reverse mortgage, as long as they live in their home themselves.

Reverse mortgages can be very beneficial for some people, but they aren’t without risks. At Altius Mortgage and our partners, Mortgage Ogden, we’re here to help you navigate those risks. Here are a few common mistakes people make with reverse mortgages, and how you can avoid them.

Underestimating Fees

Reverse mortgages can be expensive, and can come with high closing costs – origination fees can be larger than conventional mortgages as well. In addition, you will have to pay HUD mortgage insurance up front. If you can’t afford these hikes in insurance, taxes and maintenance, a reverse mortgage might not be for you.

Title Removal

Some couples attempt to remove the younger borrower from the title so only the older borrower remains. The flaw here, though, is that if the older spouse passes first, the younger one is then responsible for paying the balance. If arrangements haven’t been made or instance doesn’t cover expenses, and the younger spouse doesn’t qualify for their own reverse mortgage, he or she might have to sell the home and move.

Condos

Not all condos will necessarily qualify for reverse mortgages, so don’t simply assume. Condos must meet tighter FHA regulations than single-family homes, and condo developments as a whole can be disqualified from reverse mortgages if a high number of owners are delinquent on association fees.

Scams

Reverse mortgage scams have risen in popularity right alongside the mortgages themselves. If a reverse mortgage broker is attempting to charge you crazy rates and fees, perhaps even as high as the original loan, this could be a telltale sign. Other scammers may provide fraudulent loans or attempt to steal identities. Our brokers can help keep you far away from these scams.

Losing Eligibility

Reverse mortgages can affect Medicaid benefits and Supplemental Security income, if you don’t take the right precautions. If you take all your money up front and deposit the proceeds into a bank account all at once, you could be making yourself ineligible for these benefits. Contact your financial advisor or SSI administrator before moving forward to make sure you’re in the clear here.

Want to learn more about reverse mortgages, or any of our other mortgage services offered? Speak to the mortgage brokers at Altius Mortgage and Mortgage Ogden today.