1. What is Home Equity?

Home equity is the portion of your home's value that you truly "own." It's calculated by subtracting your outstanding mortgage balance from your home's current market value. This represents your financial stake in the property.

2. How Does the Calculator Work?

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: The calculation shows how much of your home you actually own versus what you still owe to the bank.

3. Importance of Equity Calculation

Details: Knowing your home equity is crucial for financial planning, refinancing decisions, home equity loans, or when considering selling your property.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What if my home value has changed since purchase?
A: Use the current market value, not the purchase price, for accurate equity calculation.

Q2: Can equity be negative?
A: Yes, if you owe more on your mortgage than your home is worth (called being "underwater").

Q3: How often should I calculate my home equity?
A: It's good to check annually or when considering major financial decisions involving your home.

Q4: Does this include other liens on the property?
A: No, this calculator only considers the primary mortgage. For complete equity, subtract all liens.

Q5: How can I increase my home equity?
A: By paying down your mortgage, making home improvements, or through natural market appreciation.