Equity is what a house is worth, versus what is owed on its mortgage. Your home's equity can increase in two ways. First, you can continue to pay your mortgage, so an increasing amount of the value is your equity. Another important way your equity can grow is through market value. If you mortgaged 80 thousand and your property's value has increased to 120 thousand, then your equity has increased, regardless of how much of the mortgage you still owe. In the mid to late eighties, real estate's equity increased so quickly that homes could be resold for a profit shortly after a purchase due to increased equity. The real estate market has changed drastically since then, and real estate professionals and experts no longer recommend buying homes for this type of quick profit. There are some ways you can increase your equity in a home if you need to sell it shortly after purchase. The simplest way is to make improvements to increase the home's market value. You'll need to weigh what the improvements cost with how much they increase the home's worth. Simple cosmetic changes, such as fresh paint or new flooring may prove worthwhile financially. For specific information on ways to increase your equity, contact a real estate professional.
