Home
Back
Home Equity Equation:
| From: | To: |
Home equity represents the portion of your home that you truly own - the difference between your home's current market value and the outstanding balance on your mortgage. It's essentially the amount of money you would receive if you sold your home and paid off your mortgage.
The calculator uses the home equity equation:
Where:
Explanation: This simple calculation shows how much of your home you actually own versus how much you still owe to the lender.
Details: Knowing your home equity is crucial for financial planning, qualifying for home equity loans or lines of credit, refinancing decisions, and understanding your net worth. It helps homeowners make informed decisions about borrowing against their property.
Tips: Enter your home's current market value and your remaining mortgage balance in dollars. Both values must be positive numbers. The calculator will instantly show your available home equity.
Q1: What is considered good home equity?
A: Generally, having at least 20% equity is considered good as it helps avoid private mortgage insurance (PMI) and provides better borrowing terms.
Q2: How often should I calculate my home equity?
A: It's recommended to recalculate annually or whenever there are significant changes in your local real estate market or after making large mortgage payments.
Q3: Can home equity be negative?
A: Yes, if your mortgage balance exceeds your home's current value, you have negative equity (often called being "underwater" on your mortgage).
Q4: How can I increase my home equity?
A: You can increase equity by making mortgage payments, making home improvements that increase property value, or through natural market appreciation.
Q5: What can I use home equity for?
A: Home equity can be used for home improvements, debt consolidation, education expenses, or other major purchases through home equity loans or lines of credit.