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If you’ve owned a home for several years and made responsible financial decisions, you may have built a significant amount of equity. Home equity is the difference between the current market value of your house and the amount you still owe on the mortgage. If the value is greater than the debt, you have positive equity that can be used to finance other goals.

How Does Equity Change Over Time?
There are two ways to increase the amount of equity in your home. First, you can pay down the principal on the mortgage and make improvements that will increase the value of the house. As the ratio of the amount of the house you own outright to the amount of debt increases, equity grows.

It takes years to build equity. One reason for this is that mortgages tend to charge more interest at the beginning of the repayment period, which means a relatively small amount of each payment is applied to the principal. Later in the repayment period, a higher percentage of each monthly payment will pay off the principal, so equity will grow at a faster rate.

Paying a mortgage each month can be a way to force yourself to save and build wealth. Since the value of a house will increase over time in most circumstances, you can amass a significant amount of equity if you stay in your house for several years.

Paying your mortgage on time is no guarantee that you will gain equity. If the local housing market or the economy as a whole takes a nosedive, the value of your house could plummet. You could wind up with less equity than you had before, or you might even wind up owing more than your house is worth.

How to Take Advantage of Equity
You can benefit from your homes equity when you sell it. If you receive more than the amount of the outstanding mortgage balance, you will be able to pay off the loan and walk away with a profit.

You can also use your home equity while you are living in your house. You can borrow against your equity with a home equity loan, which would provide a lump sum of money, or a home equity line of credit, which would let you borrow money in a variety of amounts over a period of time, up to your credit limit. Both options would provide you with money that could be used for home repairs and improvements, credit card bills, and other expenses.

If you want to find out how much equity you currently have, you can use a home equity calculator to get an estimate. If you want a more exact figure, you will need to have the house appraised.

Focus on Increasing Equity
Home equity takes time to build, but it can give you the financial flexibility you need to pursue other goals. Diligently paying down your mortgage and making valuable home improvements can help you grow your equity faster.

Published with permission from RISMedia.

Published with permission from RISMedia.

Owing more money on your mortgage loan than your home is worth”commonly referred to as being underwater on a home mortgage”can seem hopeless.

There were 6.7 million underwater homes in the U.S. at the end of the first quarter of 2016, representing 12 percent of all properties with a mortgage, according to RealtyTrac. The numbers are dropping since a peak of 12.8 million homes in 2012, when 28 percent of all properties with a mortgage were underwater.

For people still underwater, those numbers dont offer much solace. However, there are some options for underwater homeowners, including:

Short sale: If you have to sell your home, a short sale may get you the most money. Your lender has to agree to let you sell it for less than you owe, which may lead to the home being sold quicker than it would otherwise.

Your lender must agree to the lower price, and it will take the loss, and your credit score will fall. Lenders can also reject short sale offers on your home, causing the deal to fall through.

Refi: Refinancing your home loan wont increase the homes value and may still leave you underwater, but youll have a lower interest rate and a lower monthly mortgage payment.

It can be almost impossible to refinance with negative equity. The federal governments Home Affordable Refinance Program, or HARP, helps by giving lenders incentives to help underwater homeowners. Loans can be refinanced at 105 percent to 125 percent of a homes value.

To be eligible for HARP, the loan must be owned or guaranteed by Fannie Mae or Freddie Mac, and the borrower must be current on mortgage payments, having not missed a payment during the past 12 months. If you dont have a good credit score or high enough income, you could be denied for HARP.

Another option is the federal Home Affordable Modification Program, or HAMP. A financial hardship that puts the mortgage in default must be shown. This isnt a refinancing option, but a way to change the contract terms to lower your payments for up to 60 months.

Walk away: If you dont think your homes value will ever come back, you can walk away from your home by no longer making monthly payments and defaulting on the loan”called a strategic default.

Some consider this unethical, and the foreclosure that will eventually occur will hurt your credit score and stay on your credit report for seven years.

Published with permission from RISMedia.

Here are a few guiding principles to master transitional style.

Mix It Up

Both antique and contemporary furniture can coexist side-by-side to create a timeless feel.

Light Colors

Variations of whites, grays and soft earth tones are versatile and avoid being pegged to a specific look.

Look to the Lines

A careful combination of soft traditional style curves and sleek modern lines is one of the most important characteristics.

Keep an Open Mind

The rules arent always steadfast, so take the time to tailor the look to your personal tastes.

Published with permission from RISMedia.

Looking for a living space that will help you reconnect with Mother Nature? Heres what you should know about biophilic design.

The Basics

At its core, this design movement is all about creating a living space that feels like its a part of nature.

Design Solutions

Breaking down the barrier between indoor and outdoor spaces is a big part of biophilic design.

A retractable glass wall lets in sunlight in the winter and can open to the outdoors in the summer.

The Benefits

When we feel closer to nature,were more relaxed and in tune with our surroundings.

Additionally, biophilic design requires using clean, natural materials to build homes that use less energy.

Published with permission from RISMedia.