6 Steps to Help Build Equity in Your Home Faster

Building equity is one of the biggest financial wins of owning a home, but it doesn’t always grow as quickly as people expect. Whether you want more flexibility or a stronger safety net, the key is understanding what equity is and why it matters. Before you can speed it up, you need a clear picture of how it works.

What Is Home Equity and Why Does It Matter?

Home equity is the difference between what your home is worth and how much you still owe on your mortgage. The more equity you have, the stronger your financial position. It can help you:

• Build long-term wealth
• Qualify for better refinancing terms
• Access lower-rate home equity loans or lines of credit
• Increase your profit if you decide to sell

Understanding how equity grows — and how to speed up that growth — gives you a powerful advantage as a homeowner. Here are 6 proven steps you can take to help build equity in your home faster.

1. Make Extra Principal Payments (Even Small Ones)

The fastest, most direct way to build equity is by paying down your principal more aggressively. Even modest extra payments chip away at interest and speed up your payoff.

For example, imagine a $300,000 mortgage, 30-year term, at a 6% interest rate. The monthly payment is about $1,800. If you add an extra $300 a month toward principal, you trim the payoff to about 21 years and save more than $120,000 in interest. Increase the extra amount to $600, and the loan wraps up in roughly 16 years, with about $185,000 saved. These numbers show how even steady, mid-sized contributions can shift your equity curve fast.

Why it works:

Mortgage interest is calculated based on your outstanding principal. Reducing the principal faster means you pay less interest overall — and more of your payment goes toward what you actually own.

How to do it:

• Round up your monthly payment (for example, from $1,224 to $1,300).
• Split your monthly payment in half and pay it biweekly — this results in one full extra payment per year.
• Make one full extra mortgage payment annually, which can cut several years off a 30-year loan.
• Apply bonuses, tax refunds or other windfalls directly to your principal.

These “small” moves compound into meaningful equity growth.

2. Avoid Missed Payments and Stay on Schedule

Life happens, but missed or late mortgage payments slow down equity growth and can lead to late fees, higher interest or possibly even damage to your credit.

Why it matters:

Every missed payment delays principal reduction, allowing more interest to accumulate. Staying current keeps your loan on track and maximizes your ability to build equity efficiently.

How to stay consistent:

• Set up automatic payments
• Enable payment reminders
• Contact your lender early if a financial hardship arises
• Review your mortgage statement monthly to monitor progress

3. Make Home Improvements That Add Real Value

Not all upgrades increase market value equally. Strategic improvements can boost your home’s worth, giving you more equity without touching your mortgage balance.

High-impact upgrades include:

• Kitchens: Modern appliances, updated countertops, refreshed cabinetry
• Bathrooms: New fixtures, improved storage, fresh tile
• Energy-efficient updates: Windows, insulation, smart thermostats
• Curb appeal upgrades: Landscaping, exterior paint, lighting
• Structural or safety updates: Roof repairs, HVAC replacements, plumbing improvements

Why it works:

If your home value increases due to improvements, your equity grows instantly — even without extra mortgage payments.

4. Keep Up with Routine Maintenance

Well-maintained homes retain value better and avoid costly problems that could hurt your equity long-term.

Examples of maintenance that protects value include:

• Servicing HVAC systems
• Repairing minor leaks before they become bigger issues
• Cleaning gutters
• Replacing worn weatherstripping
• Keeping up with yard and exterior upkeep

Why it matters:

Deferred maintenance often reduces home value. Preventative care safeguards your investment. It really is that simple.

5. Monitor Your Home’s Market Value Over Time

Housing markets change, and staying aware of your home’s value helps you understand your equity position and plan financial decisions.

Here are some ways to monitor value:

• Compare recent neighborhood sales, often called comps
• Use online valuation tools
• Request a market analysis from a real estate agent
• Review property tax assessments

Why it helps:

Knowing your equity can guide decisions like refinancing, selling or borrowing against your equity for improvements.

6. Consider Refinancing When Rates Are Lower

If interest rates drop significantly, refinancing to a lower-rate mortgage can reduce interest costs and build equity faster, especially if you switch to a shorter-term loan.

Benefits of refinancing include:

• Lower monthly payments
• More of each payment going to principal
• Option to shorten your loan term (e.g., 30 years to 15 years)

When it’s worth exploring:

• If current rates are at least 0.5-1% lower than your rate
• If your credit score has significantly improved
• If you're planning to stay in your home long enough to benefit from the change

Building home equity is one of the strongest financial tools you have. With thoughtful planning, consistent payments and smart home upgrades, you can speed up your equity growth and strengthen your financial future.

Here at OMB Bank, I’m dedicated to giving you a thorough, transparent homebuying and homeownership experience. My goal is to help you understand every step so you can make confident, informed decisions and help you maximize your home’s potential as a source of long-term wealth. If you ever have questions about refinancing, home equity products or buying your next home, I’m here to help guide you.

OMB and its affiliates do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decision.