1. What is House Equity?

House equity represents the portion of your home's value that you truly own. It's calculated by subtracting your outstanding mortgage balance from the current market value of your home.

2. How Does the Calculator Work?

The calculator uses the simple equity equation:

Where:

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

Explanation: This calculation shows how much of your home you actually own versus how much is still owned by the bank.

3. Importance of Calculating House Equity

Details: Knowing your home equity is important for refinancing, taking out home equity loans, selling your home, or understanding your net worth. It's a key financial metric for homeowners.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Can house equity be negative?
A: Yes, if your mortgage balance exceeds your home's value (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 market shifts).

Q3: Does home equity include appreciation?
A: Yes, if your home's market value has increased, that appreciation is included in your equity calculation.

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

Q5: Is home equity the same as cash?
A: No, it's not liquid cash. You would need to sell your home or take out a loan against the equity to access it.