1. What is Home Equity?

Home equity represents the portion of your property that you truly "own." It's the difference between your home's current market value and the outstanding balance of all liens (like your mortgage) on the property.

2. How the Equity Calculation Works

The calculator uses the simple equity formula:

Where:

• Home Value — Current market value of your property
• Mortgage Balance — Remaining amount owed on your mortgage

Explanation: As you pay down your mortgage and/or your home increases in value, your equity grows. Negative equity occurs when you owe more than your home is worth.

3. Importance of Knowing Your Equity

Details: Understanding your home equity is crucial for financial planning, refinancing decisions, home equity loans, selling your home, or assessing your net worth.

4. Using the Calculator

Tips: Enter your home's current market value and remaining mortgage balance in dollars. For accurate results, use up-to-date figures from recent appraisals or comparable sales for home value.

5. Frequently Asked Questions (FAQ)

Q1: How often should I calculate my home equity?
A: It's good practice to review your equity annually or whenever your home's value changes significantly (after renovations or market shifts).

Q2: Can I have negative equity?
A: Yes, this is called being "underwater" on your mortgage and occurs when your home's value drops below your mortgage balance.

Q3: How can I increase my home equity?
A: Two main ways: 1) Pay down your mortgage principal, or 2) Increase your home's value through improvements or market appreciation.

Q4: Is equity the same as profit when selling?
A: No, selling costs (agent commissions, closing costs, etc.) will reduce your actual proceeds from a sale.

Q5: Can I access my home equity without selling?
A: Yes, through home equity loans, HELOCs (home equity lines of credit), or cash-out refinancing.