What is equity?
Equity is simply the amount of value a homeowner has in the property. 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 the 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 the property. Equity exists in conjunction with your Loan-to-Value ratio. Your LTV is a ratio expressing the value of your property compared to the amount of your loan. You can 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 100,000 gives you a Loan-to-Value ration of 80% and equity of 20%. You can take a home equi
Equity is the difference between the value of a property and the amount of money that is owed on the property. Equity is calculated by taking the fair market value of the property and deducting the balance due on all debts secured against it. Those debts can include first and second mortgages or home equity loans, as well as certain judgements or other charges against the property that make it security for the repayment of the debt.
-Equity is your ownership in your property. For example, let’s say that your home is appraised at $200,000. You owe a first mortgage of $100,000 and a second mortgage of $50,000. Your home equity is the difference between the value of the home and what you owe to any creditors who have a voluntary lien on your property.
