Building Equity for Refinancing

The economy has really battered home prices in Florida. We purchased our home in March of 2005 right about the peak of the housing bubble. I had accepted a new job in Florida so we needed to find a home quickly. Don't get us wrong, we love living in Florida, and we love our house, so we'll do what we must to stay. (Go Rays!)

Now that mortgage rates are at an all time low we would like to refinance our home to lower our payments. However we are concerned that our equity has sunk along with economy. So here are our thoughts to boost our home equity.

1) We have found that a minor kitchen remodel is hands down the top choice in terms of the best return on investment. Statistics indicate that a well executed remodel will net an 88-percent ROI. Based on this ratio a remodel of $3,000 may increase our equity by $5,640.

2) A bathroom remodel is another great choice which reflects an 81-percent ROI. A $2,000 minor remodel should approximately yield an equity increase of $3,760.

3) An additional way to increase equity if you are close to the value you need is to make additional principal payments. Most loans have an option that allows you to make extra payments toward the principal in addition to the basic payment.

Using all three of these options we believe we can refinance our home to receive lower payments and enjoy our new kitchen and bath as well.