The Equity Lab

On a conventional loan you can ask your servicer to remove private mortgage insurance once the balance reaches 80% of the home's original value. It ends on its own at 78% on the original schedule when your payments are current, and no later than the middle of the loan's term. Asking at 80% also needs a good payment history and can need proof the value has not dropped and no second loan on the home. FHA's premium follows its own rules; a refinance is sometimes the way to end it.

Repairs that keep the home sound, such as a roof, heating or drainage, protect the value you have. Additions and updates can add value, though rarely dollar for dollar. Keep the receipts: the cost of improvements adds to your basis when you sell, and an appraiser can see the work. Your Ownership Plan keeps a list of your projects as you add them.

A home equity line usually has a variable rate, often tied to the prime rate plus a margin, so its payment can change. Many start with a draw period of interest-only payments, then a repayment period with a higher payment. Know when your draw period ends and what the payment becomes.

An example at an example rate: $50,000 drawn at 8.25% costs about $344 a month interest only; paid off over 20 years once repayment starts, about $426 a month.

A line’s rate usually follows an index, often the prime rate, plus a margin set when you open it. When the index moves, the payment moves. Some lines have a cap on how high the rate can go, and some let you fix the rate on part of the balance.

An example: $50,000 drawn at 8.25% is about $344 a month interest only; two points higher, about $427.

This moves debt that is not tied to your home into a lien against your home. If payments are missed, your home is at risk. Selling costs, a lower value or a hard year can each eat into equity. Borrowing less than the limit keeps room to sell without bringing cash to closing, and keeps a line from being frozen if values fall.

Building costs have risen, and a policy written years ago may not rebuild the home today. Review the dwelling limit at each renewal and compare quotes; the coverage matters more than the price. A homeowners policy does not cover flood; a separate flood policy does, and a new National Flood Insurance Program policy usually has a 30-day wait, with exceptions such as a policy bought when a loan requires it. Wildfire risk affects what insurance costs and who will write it.

Colorado counties revalue homes every two years, in odd-numbered years. Notices of valuation go out by May 1, and you can appeal your value to the county assessor by June 8. A value that is too high raises your taxes; check it against comparable sales from the period the assessor used, which your notice names.

Colorado exempts 50% of the first $200,000 of a home's actual value for owners who are 65 or older on January 1 and have owned and lived in it for 10 straight years. Apply with the county assessor by July 15 for the next year's bill. Qualifying disabled veterans and some surviving spouses have their own exemption; the assessor has the full rules.

Servicers have options for a hardship: a payment plan, forbearance, or a loan modification. If you are behind and have equity, a sale or a refinance can protect it.

Be wary of anyone who charges upfront fees to save your home, asks you to sign over the deed, or tells you to stop talking with your servicer. Counseling from a HUD-approved housing counselor is free.