Your home is likely your biggest investment, and finding ways to build equity faster can put you in a stronger financial position. Whether you're hoping to access that equity for future needs or simply want the peace of mind that comes with owning your home outright, there are several practical strategies that can help you reach your goals sooner than you might think.
Understanding Home Equity Growth
Home equity grows in two main ways: through regular mortgage payments that chip away at your principal balance, and through your property increasing in value over time. While market appreciation happens naturally in most areas, you have more control over your equity than you might realize. Small changes to how you approach your mortgage can add up to significant savings and faster equity growth.
Make Extra Principal Payments
One of the most effective ways to build equity quickly is by making additional payments toward your principal balance. Even modest extra payments can shave years off your mortgage and save you thousands in interest.
"A lot of homeowners don't realize how much power they have to change their financial future," says Mike Oddo, CEO of HouseJet. "Using your money wisely by putting even a few hundred dollars extra toward your mortgage each year can cut years off your loan and free up tens of thousands of dollars that would have gone to interest. It's not about making huge sacrifices—it's about being intentional with the money you already have."
You don't need to make large lump-sum payments to see results. Adding just $100 to $200 extra each month can make a real difference. The key is consistency. Some homeowners find it easier to make one extra payment per year, while others prefer adding a small amount to each monthly payment. Either approach works—what matters is finding a method you can stick with long-term.
Refinance to a Shorter Loan Term
If you currently have a 30-year mortgage and your financial situation has improved since you bought your home, refinancing to a 15-year or 20-year loan could be worth considering. While your monthly payments will be higher, you'll pay significantly less interest over the life of the loan and build equity much faster.
The shorter loan term forces you to pay down principal more quickly, and you'll typically qualify for a lower interest rate on a 15-year mortgage compared to a 30-year loan. This combination can save you a substantial amount of money. Of course, you'll want to make sure the higher monthly payment fits comfortably in your budget before making this move.
Put Windfalls Toward Your Mortgage
Tax refunds, work bonuses, inheritance money, or even proceeds from selling items you no longer need can all go toward your mortgage principal. These one-time payments can have an outsized impact on your loan balance and the total interest you'll pay.
Instead of letting that annual tax refund disappear into your checking account, consider directing it straight to your mortgage. A $3,000 tax refund applied to your principal can save you far more than $3,000 in interest over the remaining years of your loan.
Make Biweekly Payments
Switching from monthly to biweekly payments is a simple trick that results in one extra full payment per year. Instead of making 12 monthly payments, you'll make 26 half-payments, which equals 13 full payments annually.
This approach works well for people who get paid every two weeks, as it aligns your mortgage payment with your pay schedule. The extra payment goes directly to your principal, helping you build equity faster without feeling like you're stretching your budget.
Invest in Value-Adding Improvements
Strategic home improvements can increase your property's value and boost your equity. Kitchen and bathroom updates typically offer the best return on investment, but even smaller projects like fresh paint, updated fixtures, or improved curb appeal can move the needle.
The key is choosing improvements that appeal to a broad range of buyers and align with your neighborhood's standards. You don't want to over-improve and create the most expensive house on the block, but thoughtful upgrades can definitely add value that exceeds what you spend.
Avoid Borrowing Against Your Home
While home equity lines of credit and cash-out refinances can be useful tools in the right circumstances, frequently tapping into your home's equity works against your goal of building wealth. Each time you borrow against your home, you're essentially starting over with a higher loan balance.
If you're working to build equity, resist the temptation to use your home as an ATM for non-essential purchases. Save your home equity for genuine emergencies or investments that will generate a positive return.
Round Up Your Payments
A painless way to pay down your mortgage faster is simply rounding up your monthly payment to the nearest hundred dollars. If your mortgage payment is $1,847, round it up to $1,900. You probably won't miss that extra $53, but it will chip away at your principal every month.
Over time, these small amounts add up. That $53 monthly difference equals $636 per year going directly to your principal balance—money that would otherwise go toward interest later in your loan term.
Take This First Step, According to HouseJet
Getting started is often the hardest part of any financial goal. HouseJet recommends beginning with a clear understanding of your current mortgage situation. Pull out your most recent mortgage statement and take a close look at how much of each payment goes toward principal versus interest. This can be eye-opening and motivating.
Next, HouseJet suggests using an online mortgage calculator to see how different extra payment scenarios would affect your loan. Input your current balance and interest rate, then experiment with adding $50, $100, or $200 per month. Seeing the actual years and dollars you could save makes the benefits real and concrete.
Finally, contact your lender to ensure any extra payments you make are applied to your principal balance, not held as an advance payment for next month. This small detail makes a big difference in how quickly you build equity.
The Bottom Line
Building home equity faster doesn't require a complete financial overhaul. Small, consistent actions add up over time. Whether you choose to make extra principal payments, refinance to a shorter term, or put unexpected windfalls toward your mortgage, you're taking control of your financial future.
The strategies that work best for you will depend on your individual circumstances, but the important thing is to start somewhere. Your future self will thank you for the years of mortgage payments you won't have to make and the financial freedom that comes with owning your home outright.
