1. What is Property Equity?

Property equity represents the portion of your property that you truly own. It's calculated by subtracting any outstanding mortgage balance from the current market value of the property. Equity grows as you pay down your mortgage and as your property appreciates in value.

2. How Does the Calculator Work?

The calculator uses the simple equity formula:

Where:

• \( Property\ Value \) — Current market value of the property
• \( Mortgage\ Balance \) — Remaining amount owed on the mortgage

Explanation: This straightforward calculation shows how much of the property's value you actually own outright.

3. Importance of Equity Calculation

Details: Knowing your property equity is crucial for financial planning, refinancing decisions, home equity loans, and understanding your net worth. It also helps in making informed decisions about selling or leveraging your property.

4. Using the Calculator

Tips: Enter the current market value of your property and your remaining mortgage balance in USD. Both values must be positive numbers, with property value typically being higher than the mortgage balance.

5. Frequently Asked Questions (FAQ)

Q1: Can equity be negative?
A: Yes, if your mortgage balance exceeds your property's value (called being "underwater" or "negative equity"), though this calculator shows a minimum of $0.

Q2: How often should I calculate my equity?
A: It's good practice to check annually or when considering major financial decisions involving your property.

Q3: Does this include other liens?
A: No, this calculates basic equity. For total equity, subtract all liens/loans secured by the property.

Q4: How accurate is this calculation?
A: It's mathematically precise, but depends on accurate property valuation and mortgage balance.

Q5: What's a good equity amount?
A: Generally, 20% or more equity is considered strong, allowing better loan terms and options.