Home equity…Everybody wants it, but what exactly is it, and how do you get it?

Equity represents the degree of ownership an individual or entity has in an asset after subtracting any debts against the asset. To say someone shares equity in a company means they would share in any assets remaining after all debts are accounted for.

For example, if your business has sold $500,000 worth of product this year, but you have rent, operating expenses, and a business loan payment totaling $400,000 for the year, you have $100,000 of equity in your business. Equity changes as the value of your assets and debts change.

Home equity works the same way. When you take out a mortgage to purchase a home, your home is collateral on the mortgage loan, so the outstanding mortgage principal must be deducted from the value of the home to determine your home equity.

In most cases, you make a down payment when you purchase your home. That down payment is your initial home equity. If you pay a 20% down payment on a $200,000 home, you have $40,000 equity when you close on your purchase.

Your Equity Grows

As time goes on and you continue to pay down your mortgage principal, your equity grows. Usually, the longer your own your home, the more equity you gain because you are paying down your mortgage. However, any debts you take on using your home value as collateral, such as a second mortgage or home equity line of credit (HELOC), decrease your home equity.

The changing real estate market also influences your equity. If you paid $200,000 for your home, and two years later the homes in your neighborhood start selling in the $400,000 range, your theoretical equity increases. (Theoretical because you don’t realize your home equity until you sell your home and pay off all debts against it.) You can also lose equity if the market takes a dive but be patient and it should recover in time.

Equity also grows if you make improvements on your home that increase its value. Let’s say you add a swimming pool and all new appliances. You have increased the value of the home. Your equity doesn’t increase by the amount you spent on the improvements, but on the value you get upon resale. This is an important point when considering making improvements prior to putting your home on the market, and one that is often misunderstood.

Let’s say Joe spends $50,000 on upgrades to his home. He might tell his neighbor, “I have $50,000 in my home,” but when he goes to sell, the current market dictates how much he will actually get in return. If Joe ends up selling for $40,000 more than he originally paid, his $50,000 investment got him $40,000 in home equity.

Some things you can do to increase your home equity include:

1) Make a large down payment when you purchase your home. The more cash you put down, the more equity you begin with.

2) Make increased or extra payments on your mortgage principal. Adding to the principal portion only on your monthly payments, or making extra payments when you are able, helps chip away at your outstanding debt.

3) Be smart when making home improvements. Not all improvements build equity. Some improvements may be personal preferences that don’t necessarily add value for resale. Improvements such as a new HVAC system, new appliances, or a new roof are usually more reliable investments than a fountain in the front yard or surround sound speakers throughout the house.

4) Don’t borrow against your home equity unless you must. Home equity is often a homeowner’s biggest asset, and can help to build your retirement nest egg, but it can also come in handy if life throws you a curve ball and you need to borrow against it for an unforeseen emergency. Be careful not to borrow against your equity for frivolous purposes, so it will be there if you really need it. Only use it to pay off debt that is higher interest or higher monthly payment.

5) Sell when the market is favorable. If you are counting on your home equity to help finance your next home, pay for your children’s education, or add to your retirement funds, try to sell during a seller’s market when inventory is needed in your area.

Need to talk to a lender? Start your application HERE.

Member FDIC | Equal Housing Lender

Renovating Your Home? Check Our FAQs!

1. How do I pick a contractor?

Ideally, you want to build the same kind of relationship with your contractor as you do with your real estate agent: one built on trust that makes you want to go back to that person for any future needs. Your contractor should be a very good listener and communicator. You want them to “get” your vision for your home, and to keep you in the loop every step of the way. Do your due diligence by checking out contractors’ reputations, talking with other clients, and looking at work they have done previously before you make your selection.

2. How much will my project cost?

Of course, the answer depends upon the scope of your project, but in order to get the best estimate from your contractor, take time to write down each detail of your plan so that the contractor can include everything in their estimate. Renovations are famous for taking longer and costing more than originally planned, but this is often because the homeowner makes additions or changes along the way, or they don’t realize that, for example, if you move a wall in your home, you may have to then reroute electricity and outlets. One item often leads to another, so you have to look at everything piece by piece.

3. How long will home renovations take to complete?

As we said above, this depends on the amount of work being done– and how many changes are made along the way. The more pre-planning you do, the better estimate your contractor can give you.

4. How do I prioritize projects?

If you are living in your home during renovations, you may want to plan out the project in phases, so you can live out of some rooms while others are being worked in. You may also need to phase projects based on cost and availability of funds.

5. Where do I begin on home renovations?

You begin by conducting a lot of research. Start a look book for your home, either in a notebook or online, collecting pictures of the look and finishes you want. Talk to different contractors, and visit kitchen, bathroom, appliance, and flooring showrooms to get ideas on selections and pricing.

6. Do I need permits?

Your contractor will know what projects require permitting. Make sure that you do abide by permitting regulations, as failure to secure proper permits can come back to bite you if further work is needed down the road.

7. How much will renovations increase my home value?

Every homeowner hopes that making improvements will increase their home’s value, and this is usually the case, but sometimes what homeowners view as improvement can turn out to be liabilities to future buyers. For example, don’t put so much money into the house that it becomes more expensive than the rest of the neighborhood. And be careful not to add personal style preferences that can’t be easily changed, like ornamental fixtures, radical architecture, or unusual landscape features.

8. How should I pay for home renovations?

If you have the cash to pay for your renovations, that’s certainly a good way to go. Otherwise, you might consider a home equity loan with a manageable monthly payment or a revolving line of credit that you can use for renovations as well as emergencies that may arise later. Visit HERE to talk to one of our Farmers Bank & Trust Mortgage team members about financing your home renovation project!

MEMBER FDIC | Equal Housing Lender

Mortgage is not the career path Madison Haltom had ever envisioned for herself. But, now she feels like she’s living her dream helping people into their dream homes. Madison works in one of Zillow’s most popular housing markets of 2022 – Prosper, Texas.

In this Right at the Heart Podcast episode, Madison talks about:

  • How she got started in mortgage
  • What you need to know to own your dream home
  • Advice for first-time homebuyers
  • Jumbo loans and the benefits for those who qualify for one
  • Investment properties

Tired of renting and want to move towards buying? Then it’s time to start chipping away at what you’ll need for a down payment. Not sure how to get started? Here are a few places to start!

  • Lace up and hit the streets instead of the gym: Save $60 per month
  • Slash your 4-5 days a week Starbucks runs down to just 1x per week: Save $120 per month
  • Buy store brand groceries: Save 25% on your monthly grocery budget
  • Plan out meals each week instead of picking up takeout: Save $150 per month
  • Trim that clothing budget (just a little!): Save $100 per month

These ideas alone could save you almost $500 every month. In two years’ time, that’s $12,000! And when you keep the goal before you — owning your very own home — it’s even easier to stay motivated!

If you have questions about financing, contact Madison HERE.

NMLS# 2064263

Member FDIC | Equal Housing Lender


Your home mortgage is an important investment in your future, and a mortgage refinance can be a smart move to help you manage your investments when used under the right circumstances.

Here are some things to consider about refinancing your mortgage.

Simply put, when you refinance your mortgage, you are taking out a new loan to pay off your original mortgage, so the first question to ask yourself – is there a better product available to you than what you started with?

  • Refinancing allows you to borrow against the equity you have built up in your home and take out the cash you can use to pay off other debt, make home improvements, or invest in your retirement. For example, let’s say you have $70,000 of equity in your home, but still owe $175,000 on your mortgage. You may take out a new mortgage for $200,000 that is used to pay off the first mortgage, and then pays you $25,000 in cash. If you have made regular payments on your initial mortgage for at least five years, you probably have enough equity built up to take a cash-out mortgage.
  • Another reason to refinance is to reduce your monthly payment to give you more flexibility in your monthly budget. When you refinance, you are basically starting over on your 30-year commitment, but, if you are not taking cash out, your new mortgage amount will be lower, so your payments decrease.   If you originally took out a 15-year mortgage, changing to a 30-year term will lower your monthly payment considerably. You may also choose the opposite and switch from a 30-year loan to a 15-year term. Your monthly payments will likely increase, but you will pay your loan off earlier and pay less interest.
  • Another reason people refinance is to change from an adjustable-rate mortgage (ARM) to a fixed rate. This eliminates fluctuations in your monthly mortgage payment and may help you take advantage of favorable rates.

Before you decide to refinance, do some homework. You should:

  1. Perform an audit of your monthly budget
  2. Assess your short and long-term financial goals
  3. Check your credit score
  4. Watch interest rate fluctuations
  5. Consider the costs involved in refinancing as there will be closing costs on your new loan

Have more questions about refinancing? Our Farmers Bank & Trust Mortgage team is here to help! Contact us at 855-855-3268, find a Loan Specialist HERE, or start your application HERE.

Member FDIC | Equal Housing Lender

Nothing says “I love you!” like a bit of home maintenance! If a little pre-spring cleaning is your jam, now is the perfect time to get a head start. ⁣

To help, here’s a February home maintenance checklist sure to get your juices flowin’:⁣

  • Freshen indoor paint on walls, cabinets, doors, and trim.⁣
  • Clean and reorganize your laundry room, so it’s clutter-free and more efficient.⁣
  • Clean the air duct that connects the back of your dryer to the outside vents.⁣
  • Clean the refrigerator condenser coils at the back or on the bottom of the appliance.⁣
  • Clean the range hood filter and fan.⁣
  • Clean and degrease kitchen cabinets.⁣
  • Clean garbage disposal by running it with crushed ice to sharpen, then with baking soda and citrus peels.⁣
  • Vacuum the box springs and the mattress top and bottom. Rotate or flip the mattress.⁣
  • Check caulking and grout around sinks, showers, and tubs⁣.
  • Inspect the roof (with a friend’s help holding the ladder) for missing shingles and damaged vent boots.⁣
  • Check the foundation for cracks that can cause significant issues when spring rains arrive.⁣
  • Test carbon monoxide and smoke detectors; replace batteries as needed.⁣

There are many financial decisions involved in purchasing or refinancing a home. Let our Farmers Bank & Trust Mortgage team help! Visit HERE for mortgage calculators and more resources.


It’s the most wonderful time of the year! We want to give one of you a Balsam Hill™ Christmas Tree to brighten up your home this holiday season. 🎄

Entering is easy!
1. Like our Facebook page 
2. Comment your favorite Christmas tradition on this post

We will randomly select a winner on December 3, 2021, at noon CST! Read the guidelines below.


*Contest Rules | To win the prize participants must like Farmers Bank & Trust Mortgage Facebook page then like and comment on the Farmers Bank & Trust Mortgage Christmas Tree Giveaway post by December 3, 2021, at noon CST. The persons who win must reply to a Facebook message or phone call on December 3, 2021. One entry is allowed per Facebook profile or person. Participants must reside in Arkansas or Texas only.

Winners cannot be an employee or immediate relatives of a Farmers Bank & Trust employee to include siblings, children, parents, or grandparents. Must be 18 years old or older to win. It is not necessary to be a Farmers Bank & Trust customer to win.

Farmers Bank & Trust is the sole sponsor for this Contest. Balsam Hill™ is not affiliated. Hallmark Channel is not affiliated. No purchase is necessary to win. Purchasing does not increase the chances of winning. The Christmas tree may not be transferred, duplicated, auctioned, shared, or sold. Should a rule or law be violated, or if, in the opinion of Farmers Bank & Trust, fraudulent or improper methods were used, the participant will be disqualified from all winnings of the Contest.

Farmers Bank & Trust is not responsible for participants that have Facebook security settings set to private so that Farmers Bank & Trust cannot see a participant’s Facebook engagement in any way. It is the responsibility of the participant to modify their security settings to open. The winner must sign Farmers Bank & Trust photo release form to be posted on the Bank’s social media pages. Farmers Bank & Trust reserves the right to amend these rules without notice.

This promotion is in no way sponsored, endorsed, or administered by, or associated with Facebook.

Want to stay in the know of all things Farmers Bank & Trust Mortgage?

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MEMBER FDIC | Equal Housing Lender

You’ve decided you want to build your dream home.

Now, you need to hunt down and snatch up that perfect piece of paradise to call home. Here’s how to go about finding just the right spot:⁣

  1. Consider the general layout of the home you want to build. Sprawling ranch? Front-porch farmhouse? Two-story bungalow? The lot you choose should complement the home you envision.
  2. Save time by narrowing down where you want to live. Then research available lots in those areas.
  3. Link arms with an agent who knows local builders and can help assess a lot’s potential. You want to be well-acquainted with a lot’s slope, drainage, and utilities.⁣
  4. Check with the local zoning office about the land you’re interested in purchasing. Pay attention to surrounding land as well, and try to weigh what future zoning and construction will happen in the area. Your agent can help with this!
  5. If you’re looking to buy in an established neighborhood, research minimum square footage or building materials requirements. Ask about HOA fees or restrictions that could limit your number of pets, vehicles, or home additions down the road.⁣
  6. Meet with reputable lenders familiar with construction loans to learn your financing options.⁣ (We can help here!)
  7. Work with an agent to write and negotiate an offer.⁣
  8. Attend your closing and break ground!⁣

⁣If you’re leaning toward new construction and need help with financing, the Farmers Bank & Trust Mortgage Team can help! Contact one of our lenders by visiting HERE to find out what financing options work best for your situation.

Member FDIC | Equal Housing Lender

I didn’t know this years ago, but for me, my late 20s are shaping up to be an extremely exciting time of life. Just in the past year, I started school again and am an MBA candidate. I got engaged. Now, we bought a house! It’s a lot of really expensive, really big decisions, and a ton of organization and planning all at once. Doing all of this at the same time is probably nuts, but for me, it’s just the right time for all of it, however, there are some challenges with buying a home and being an MBA student.

Some people in my class already have homes and families, some are still single, and some are in the same stage as I am. We’re in grad school but not wanting to put our whole lives on hold while that happens. That is the whole reason I chose the Professional MBA program in the first place. This post is for those in the last group.

Finding a mortgage lender is hard. Actually, that’s false, do a google search and thousands of results show up. But finding a good mortgage lender is the hard part. Lenders have to pull your credit, examine your payment and work history, look at your cash and assets to find out how much they can lend you, and make sure you can pay on the mortgage. If you have school loans it shouldn’t be a huge issue, but definitely speak with your realtor and lender ahead of time to make sure buying a home is feasible at this time.

When buying a house, the mortgage lender takes all debt into account. So opening new school loans right before starting our house hunt made me nervous, but once again, I’m impatient and didn’t want to wait. Still, make sure to speak with your mortgage lender about your plans. They’ll be able to advise on the best route forward. The trickiest period will be right before closing. Sometimes it is out of your control, but if at all possible, try not to make large tuition payments out of the accounts your lenders are counting towards your close. It’s also super important to not open any new credit lines during this time, and I imagine new loans should be avoided if possible as well. Each situation will be different, so speak with your Farmers lender to be certain.

Apply For a Mortgage Online with Farmers Bank & Trust

Kasey pictured with Ray Smith, Farmers Bank & Trust Prosper Market President, and Madison Haltom, Mortgage Loan Originator NMLS# 2064263

I had the pleasure of visiting one of the Farmers Bank & Trust branches in Prosper, TX. I grabbed some free Starbucks coffee and sat down to speak with Madison, the Mortgage Loan Originator on-site, and Ray the Prosper Market President. They walked me through the lending process and shared some helpful information for you when applying for your mortgage online.


I highly recommend speaking with someone either in person or on the phone before sending all of your information through an online system. Farmers Bank is 100% reputable, but you still want to know who you’re dealing with. We shopped around to 3-4 lenders before choosing and some had different interest rates, some had different fees, and some we just didn’t like the vibe we got from them. You’ll be giving these people a ton of personal and financial information, so you need to feel comfortable with the people handling your details.


You could have made best friends with your lender, but if they aren’t available when you need them, they aren’t a good lender for you. Especially in this Seller’s market, you’ll need information, pre-approval letters, and so much more from your lenders that you need them to answer your call. They could be the difference between making or missing an offer deadline. Farmers Mortgage Lenders aren’t sitting in a corporate office and checking out at 5 pm. They are local to each branch and ready to take your call at a moment’s notice. Madison even told me she gave out her cell number to her clients so they could reach her at literally any time of day!


Farmers Bank has the benefit of being tied to the bank. So, if you need help raising your credit score or building credit from the ground up, you can sign up for their Foundation Credit Card. It starts with a low limit so you can get used to using it and paying it off. Your limit grows as your credit builds. This can prepare you for buying a home in the future.


You’ll need a solid down payment. Your exact down payment will be dependent on the type of loan you go with, but it will typically be somewhere between 3-5% minimum. For example 5% of 300,000 is $15,000. In addition to your down payment, you’ll need cash for earnest money, closing costs, and so much more. You need a good cushion to buy a home and make it through closing, but a good lender will walk you through everything and always be available to answer your questions.

This part is difficult when also paying for school. Your savings can mess with your FAFSA, and you have to make sure your loan officer knows everything so that it doesn’t mess with your mortgage. Both can absolutely be done, but you have to be transparent on all ends and plan extra carefully.

Visit the Running in Heels blog HERE.

For mortgage resources and to start your application, visit HERE.