How to Make Your Home a Wise Investment

Your house is likely your largest monthly expense, and will probably be the biggest investment you make in your lifetime. While we all think about 401(k) accounts and the stock market, real estate remains one of the soundest investments a person can make. Homeowners who pay off their mortgages over time build equity while their home appreciates in value. To get the most out of your real estate investment, be sure to follow these tips:

Don't treat your house like a piggy bank: It can be tempting, but it is imperative that you resist the urge to take out equity from your home. Many homeowners have lost their homes in recent years because they owed more than their houses were worth. One of the fastest ways to "get underwater" in a home is by taking out outrageous equity lines and second mortgages. Take pride in the equity you have in your home; don't risk financial trouble by casually taking away your equity. Most financial experts say equity loans and second mortgages are wise when used reasonably - don't abuse the luxury.
Stay abreast of local property values: Stay in the know about your local real estate market, including the prices of homes in your area. This will help you understand if your home is appreciating in value, or if your home's value has dropped over time. It is important to know how much your home is worth and how much you owe on it.
Watch interest rates: One of the wisest ways to protect your investment is through monitoring mortgage rates. You could refinance your existing mortgage into a loan with a lower interest rate or a loan with a shorter term (such as 15 years), which could save you significant costs over time. Use services such as those provided by Refinancez.com to make sure you're getting the best proposals for refinances possible.
Don't over-improve your home for the neighborhood: Sure, granite kitchen countertops are nice, and so are stone floors. But are those features out-of-place in your neighborhood? One of the biggest mistakes homeowners make is over-improving their homes. Often, homeowners spend tens of thousands of dollars on improvements that end up not adding any value to their homes. The goal is to invest and improve your home for its marketplace - not spend so much that you'll never get back the return on your investment.
Keep an eye for resale: If you know that you'll be leaving your home someday, make sure you prepare for resale over time. This means making decisions about appliances, fixtures and home features that will appeal to a broad audience. Transforming a bedroom into a darkroom might be great for the short-term - but would a prospective buyer want to spend the money on returning the room to its original condition? Keep this in mind as you customize your home.
Pay off your mortgage: To many Americans simply assume that they will always have a house payment. Not the case. Try to apply a little extra each month to your mortgage - even an insignificant amount can add up. You could very quickly reduce your loan's term from 30 years to 20 by paying a small amount extra each month. Before you make extra principal payments, make sure your mortgage doesn't have a prepayment penalty.