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Home Equity Equation:
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Home equity represents the portion of your home that you truly own. It's the difference between your home's current market value and the outstanding balance on your mortgage. Home equity increases as you pay down your mortgage and as your property value appreciates.
The calculator uses the simple home equity equation:
Where:
Explanation: This straightforward 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, refinancing decisions, home equity loans, selling considerations, and understanding your net worth. It helps you make informed decisions about leveraging your property for other financial goals.
Tips: Enter your home's current market value and your remaining mortgage balance in the same currency. 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 healthy as it eliminates private mortgage insurance (PMI) and provides better borrowing terms.
Q2: How can I increase my home equity?
A: You can increase equity by making mortgage payments, making home improvements that increase value, or through natural market appreciation.
Q3: Can I have negative home equity?
A: Yes, if your mortgage balance exceeds your home's current value (known as being "underwater" on your mortgage).
Q4: How often should I calculate my home equity?
A: It's good practice to recalculate annually or when considering major financial decisions involving your home.
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.