What is equity?
(back to top) Equity is a crucial aspect of home loans. Equity is simply the value of a homeowner’s unencumbered interest on real estate. Equity is computed by subtracting the total of the unpaid mortgage balance and any outstanding liens or other debts against the property from the property’s fair market value. A homeowner’s equity increases as he or she pays off his or her mortgage or as the property appreciates in value. When a mortgage and all other debts against the property are paid in full, the homeowner has 100 percent equity in his or her property. Equity exists in conjunction with your loan-to-value ratio (or LTV). Your LTV is a ratio expressing the value of your property to the amount of your loan. You determine your LTV by dividing your loan amount by your property’s value or selling/purchase price, whichever is lower. For example, you buy a $100,000 home with a $20,000 down payment of your own money, and cover the remaining $80,000 with a mortgage – 80,000 divided by 100,0
Equity is the value of anything that is owned, such as a business or a house, less any outstanding debt. If your business is worth $100,000 and you owe $70,000 in business loans to your bank, then you have $30,000 worth of equity in the business. Businesses can be financed with equity and/or debt. If a business is financed with equity, then the provider of equity receives an ownership stake in the business. For example, your company may sell shares of stock (equity) to raise money. The value of equity in a business changes over time as the value of the business itself changes. Please see Section 4 below.
Equity is simply the value of a homeowner’s unencumbered interest on real estate. Equity is computed by subtracting the total of the unpaid mortgage balance and any outstanding liens or other debts against the property from the property’s fair market value. A homeowner’s equity increases as he or she pays off his or her mortgage or as the property appreciates in value. When a mortgage and all other debts against the property are paid in full, the homeowner has 100% equity in his or her property. What is a IRS-4506 form? A 4506 form is an IRS form, which authorizes a mortgage lender to obtain copies of a borrower’s tax returns directly from the IRS.
Equity is the amount of value a homeowner has in a particular property. The available equity is calculated by subtracting the total unpaid balances on all mortgages, outstanding liens, judgments and other debts against the property from the property’s fair market value. A homeowner’s equity will increase as they pay down or payoff any mortgages against the property or through property appreciation. Mortgage lenders use a formula called Loan-to–Value ratio or LTV. The LTV is determine by dividing your loan amount by your property’s appraised value or purchase price, whichever is lower. You can get a home equity line of credit or a home equity loan based on the available equity in your home. Center Street Mortgage has home equity lines of credit and home equity loan programs up to 100% LTV.
