Home Equity Advice For Different Ages

Regardless of age, building a home equity is a big investment. Financial experts consider this to be a form of “forced savings”.

The basic principle of building home equity is the same for everyone (paying off as much mortgage as possible), but in today's financial environment, different generations face different challenges. Therefore, no matter how old we are, we've put together some tips on building home equity.

Home Equity Advice for Ages from 18 to 34

Not all millennials are homeowners, but they are quickly joining the ranks. If you are of this generation, know that you are part of the largest group of home buyers (32%) in the United States.

If you are in this age group, the most important thing in building equity in your home is to choose a short-term mortgage over a traditional long-term mortgage. Yes, you'll pay more each month (but not a lot, you can do the math here), but you can also save a lot of cash interest over the life of the loan, and usually lower interest rates.

One problem: This generation faces the challenges of student debt and the credit crunch, while other generations may not. If your own debt ratio is not high, you may have to pay more for the debt to increase the ratio. If buying a short-term loan just isn't feasible for your budget, try a longer period and promise to pay an additional monthly fee (in fact, that's it!). The best tool is to automatically transfer mortgages. First, add only $ 100 to your mortgage each month, then leave it alone. Before you know it, you'll be building more equity, which will give you a head start towards a future of financial freedom.

Home Equity Advice for Ages from 35 to 51

Easily available mortgages encouraged Generation Xers (Ages from 35 to 51) to buy homes at record highs, but the stock market crash also severely affected the group's home equity. You might have been through a rough patch in the past, but luckily the rough patch is fading away as Gen Xers like you begin to reap the rewards for the careers they've built. A study shows that by 2030, Gen X in the United States could see their share of wealth drop from the current 14% to more than double 31%.

As a member of the Generation X group, you are likely to be very smart about your home equity - you view the home not only as a place to live, but also as a tangible and financial asset. In order to make the asset more valuable, please consider raising funds immediately when interest rates are lower. You can also consider using some of your improved cash flow for home decorating and another method of building equity in your home by increasing the value of the home. Therefore, if you decide to sell your home, you will get a better return on your investment.

Home Equity Advice for Ages from 52 to 70

Most baby boomers (Ages from 52 to 70) bought a home in the '80s and' 90s, which means many of those homes have already been paid off, or at least when the mortgage payment is about to end. If you are a temporary worker, your home can be one of your biggest financial assets.

With the retirement of many temporary workers imminent, it is best to maintain home equity. Stay the same and enjoy the lifestyle established by your years of saving and planning to achieve that goal. Or maybe you are ready to downsize or move to your dream home. It's time to use the equity in your home: invest, buy or build a new home, or use it for other life events.

So where do you start when you calculate your home equity? First find the current market value of the house, then subtract the amount of your mortgage that you have paid off. Once you have done this you can better understand the amount of equity you have and you might have a plan to acquire more equity.

Consider the following options for your home equity:

Perform home renovations. Do your grandchildren attend it? Along with home equity, a line of credit can allow you to expand your home or even build a vacation home. 

Think about reverse mortgages. If you're 62 or older, using a reverse mortgage allows you to use the equity in your home - no payment is required and that doesn't limit how you can use the money. When you sell a house or transfer it to the next generation, your loan plus interest will be deducted from the value of the house.

Regardless of your age, the key to using the equity in your home is to always make progress towards your goals. Do you want to help your child go to college? Improve your home? Buy a second home? Consider how much income you can make before the target date. Then, whether you buy, refinance, or use your own equity, you'll be better prepared.