1. What is Home Equity?

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

2. How Does the Calculator Work?

The calculator uses the simple home equity formula:

Where:

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

Explanation: The equation shows how much of your home's value you actually own after accounting for what you still owe to the bank.

3. Importance of Home Equity

Details: Home equity is important because it represents your financial stake in your home. It can be used for loans or lines of credit, and it grows as you pay down your mortgage and as your property value increases.

4. Using the Calculator

Tips: Enter your home's current market value and remaining mortgage balance in USD. Both values must be positive numbers, with home value typically greater than mortgage balance.

5. Frequently Asked Questions (FAQ)

Q1: Can home equity be negative?
A: Yes, if you owe more on your mortgage than your home is worth (called being "underwater" or "upside-down" on your mortgage).

Q2: How often should I calculate my home equity?
A: It's good to check annually or whenever your home's value changes significantly (after renovations or during market shifts).

Q3: Does home equity include my down payment?
A: Yes, your initial down payment contributes to your starting equity, and payments since then have increased it further.

Q4: How can I increase my home equity?
A: By paying down your mortgage principal, making home improvements that increase value, or through natural market appreciation.

Q5: Can I access my home equity?
A: Yes, through home equity loans, home equity lines of credit (HELOCs), or cash-out refinancing.