How Do You Calculate Equity In A Home?
For most people, the option of buying a home without a loan is out of reach. Instead, lenders offer a special kind of loan known as a mortgage. With a mortgage, the lender holds the house as collateral until the balance of the loan is paid off. However, before the loan is paid off, it is possible that the house will be worth more than the loan. The additional worth is known as equity. Calculating how much equity is in the house is just some simple math. Examine the recent mortgage statement to find the balance remaining on the mortgage. This number is the current mortgage balance. Examine the HELOC or home equity loan statement to find the balance remaining, if there is such a loan on the property. Add this number to the current mortgage balance. The result is the total amount owed. Determine the value of your home. A formal appraisal can be done to find the current value of the home. As another option, some online services will estimate the value of your home based on public records.
