1. What is Home Equity?

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 of all mortgages and liens on the property.

2. How Does the Calculator Work?

The calculator uses the simple equity formula:

Where:

• \( Home\ Value \) — Current market value of your home
• \( Mortgage \) — Outstanding mortgage balance

Explanation: This calculation shows how much of your home you actually own versus how much you still owe to the lender.

3. Importance of Home Equity Calculation

Details: Knowing your home equity is crucial for financial planning, refinancing decisions, home equity loans, selling considerations, and understanding your overall net worth.

4. Using the Calculator

Tips: Enter your home's current market value and your remaining mortgage balance in dollars. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is considered good home equity?
A: Generally, having 20% or more equity is considered good as it eliminates private mortgage insurance and provides better borrowing options.

Q2: Can home equity be negative?
A: Yes, if your mortgage balance exceeds your home's market value, you have negative equity (also called being "underwater" on your mortgage).

Q3: How often should I calculate my home equity?
A: It's recommended to reassess your home equity annually or whenever there are significant changes in the housing market or your financial situation.

Q4: What factors affect home equity?
A: Home equity is affected by market conditions, property improvements, mortgage payments, and local real estate trends.

Q5: How can I increase my home equity?
A: You can increase equity by making mortgage payments, home improvements that increase value, or benefiting from market appreciation.