Sweat equity isn't just for resale value. It also helps with refinancing. When you re-fi, you want at least 20% equity in your home. Not only could this make a difference in your interest rate, or even just qualifying for a loan, but having 20% equity should eliminate that nasty little PMI that nibbles away at your principal payment each month.

Then there's the psychic reward of being able to show off a home improvement project that you did with your own 2 hands.

Finally, you'll get to enjoy the results and know that the project cost way less than if you had hired someone else to do the work.

Here's what you need to know about building sweat equity.

Choose projects that are long on labor and short on materials.

The reason it's called sweat equity is that you do the work. Since the bottom line is to build equity, you want to choose projects with low materials costs, but labor-intensive, so lenders will be impressed, but you won't have to run up a bunch of debt to get the work done.

Another consideration is expertise. Unless you know an expert who will give you unlimited free advice, stick to projects that are relatively easy and safe to do. (Putting up a new roof would NOT be a good choice.)

Think "low maintenance."

New paint and carpeting may be necessary, but they won't do much for your bottom line because they both wear out and have to be done again every few years. (Also, laying carpet is a real bear if you don't know what you're doing.)

2 good examples of sweat equity projects that qualify on all counts, are a sprinkler system for the yard, and tile floors in the kitchen and bathrooms. Both of these projects will give you a good return on investment. Neither require any special training or experience, and both are inexpensive for materials. The DIY cable channel has some great programs on sweat equity, but the information is also free online. Here is a link to DIY Sweat Equity.