Home Ownership

4 ways to build home equity

Couple expanding their home with a home equity loan to increase their home value.

Is your home one of your biggest assets? For many Americans, the answer is yes.

If this is true for you, you might be concerned with how to protect your home’s equity and grow its value as part of your overall financial plan.

But even if you have positive home equity, that doesn’t mean you should get complacent about it.

“Equity reduction can come when you least expect it,” says Rob Cook, Head of Marketing and Customer Experience for Discover® Home Loans. “Even slight economic or real estate fluctuations could reduce home prices, and you want to be in a good equity position if that happens.”

Here are four ways to consider working on building home equity no matter current economic conditions.

1. Increase home equity by reducing your principal mortgage balance

One of the easiest ways to not lose home equity is to simply stay in your home and make regular payments on your mortgage—and make additional ones if possible. The goal is to reduce the principal you owe on your loan. Over time, as you pay down your mortgage and your the value of your home increases, your equity will rise.

While your home’s value will fluctuate over time (and could even go down certain years), the money that you pay toward your mortgage will allow your equity to continue growing.

2. Increase value and equity with home improvements

When you make changes to, repair, maintain or improve your home, think about whether they’ll add value for a future buyer, even if you’re not planning on selling any time soon. While it’s rare for home renovations to generate an immediate dollar-for-dollar return on investment, they can help improve the value of your home over time and make it easier to sell or refinance.

To get the best return, aim to keep your projects in line with other homes in your neighborhood.

3. Leverage home equity to pay for projects that increase income

A home equity loan can serve as a powerful financial tool. Using home equity to improve the value of your home, start a business, invest in education, or consolidate debt to a lower rate can result in smart, long-term financial moves.

Some lenders, like Discover Home Loans, can even help you save money when you refinance by offering zero origination fees and zero cash due at closing. But it’s important to make sure that you understand the terms of the loan and have a clear plan for how you’re going to pay it back so you don’t lose equity.

4. Convert to a fixed-rate mortgage

One factor to consider: rate fluctuations. If you’re worried that rates could go up in the future, locking in a fixed-rate home equity installment loan while rates are low means that rising rates in the months or years ahead would have no impact on your payment.

Use your home's equity with a home equity loan

If you’re looking for ways to tap into your home equity and pay for renovations that might increase your home’s value or other major expenses, then a home equity loan might be the right solution for you. The funds from a home equity loan are delivered in one lump sum when you receive them, and they often come with low, fixed rates compared to other types of loans.

To get an understanding of how much you may be able to borrow, use the loan amount calculator from Discover Home Loans.

Did you know?

The home equity you’ve earned
can be used in a multitude of


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  • Weekdays 8am–Midnight ET
  • Weekends 10am–6pm ET