Home equity is the amount of your home’s total value that you own, with any mortgage lender owning the rest. Your equity typically increases with the repayment of your mortgage. But, equity can also rise in other ways. CoreLogic reported that homeowners with mortgages saw their equity grow by 27.8% between September 2022 and the previous year. It is an impressive increase for such a short amount of time.
In spite of rising interest rates and slower home sales, home values remain high. This means that homeowners in the US still retain a large portion of equity gains made during the hot 2021-2022 housing market.
Homeowners with higher equity have more options to use their stake in the home to fund other purposes.
You might consider getting a home equity loan for your vacation or to fund your dream wedding. You could also tap into these funds to pay off your basement remodel, or consolidate debts.
Perhaps you’re looking to buy a home soon and want to know more about how to put your existing equity toward a new and spacious abode.
There’s quite a bit you should know about home equity, especially if you plan to borrow from it. Let’s take a look at what home equity is, how it grows over time, and why it’s so important to use it wisely.
What is home equity?
Home equity is a homeowner’s financial stake in their property that they own free of their mortgage loan obligation. It’s calculated by taking the current value of your home minus your principal balance and the total of any additional liens that must be paid off before selling the property.
These liens can be in the form a second mortgage, outstanding property tax, or child support. But if you don’t have any additional liens to account for, simply take your home value minus your unpaid principal to estimate your home equity.
How much equity do you have in your home?
The following information is required to calculate your home equity:
- Current home value
- The unpaid principal amount
Let’s break down how to obtain estimates of each figure.
What’s your home worth?
There are several ways you can find out how much your home is worth right now:
Our Home Value Estimator pulls data from public records including tax records, assessments, and sales records to find comparable properties in your local area. You can use a very short…
You can find more information at www.homelight.com