5 ways to turn real estate into liquid assets and increase your home equity

Because there are 52 months in a year, if the homeowner makes a payment every two weeks, he will eventually pay 26 payments a year (each payment is half of the monthly payment), which means 13 monthly payments. If the payment is made monthly, it will be 12 monthly payments a year. Therefore, biweekly payments will pay a little more than normal monthly payments over the course of a year.

3. Live in a house long enough

Homes tend to appreciate in value over time, so if you can stay in the same home for several years instead of moving every few years, you’ll have the opportunity to build more equity.

Let’s say you buy a house for $300,000. If after 10 years the house is worth $350,000 more, the equity in the house will automatically increase.

Having more equity in your home gives you a variety of options, often allowing you to borrow funds affordably when needed through a home equity loan or line of credit (HELOC). Having extra equity also gives you the option of a cash-out refinance, which is another affordable way to borrow money when mortgage rates are low.

4. Get rid of mortgage insurance as soon as possible

Private mortgage insurance (PMI) is an insurance that lenders require homeowners to purchase in case they fail to repay their loans on time. Usually, the cost of mortgage insurance is 0.1% to 2% of the loan, which will be spread over the monthly mortgage payment, which will also slow down the accumulation of home equity. If the homeowner pays a 20% down payment when buying a house with a loan, then there is no need to purchase mortgage insurance. If the loan repayment exceeds 22% of the loan in subsequent repayments, the mortgage insurance will be automatically cancelled.

The mortgage insurance for FHA loans is called mortgage insurance premium (MIP). Homeowners who pay at least 10% need to pay MIP for 11 months, but if the down payment is less than 10%, then you have to pay MIP for the entire loan period. If you don’t want to pay “for life”, you can refinance to a regular loan later.

5. Renovate your home

Home improvements can increase the value of your home, which can increase your net worth. But keep in mind that you may not get back all the money you invest in home projects. Some projects offer a higher return on investment than others.

For example, an upscale bathroom renovation has an average ROI of just over 45%, while a classic wood deck will almost recoup 83% of its cost, according to the 2024 Remodeling Cost vs. Value Report.