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. This value is important for refinancing, selling, or borrowing against your property.

2. How Does the Calculator Work?

The calculator uses the simple equity formula:

Where:

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

Explanation: The calculation shows how much of the property's value you would keep if you sold it today after paying off the mortgage.

3. Importance of Equity Calculation

Details: Knowing your property equity helps in making financial decisions like refinancing, taking out home equity loans, or determining your net worth. It's also crucial when considering selling 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. The calculator will show your current equity position.

5. Frequently Asked Questions (FAQ)

Q1: Can equity be negative?
A: Yes, if the mortgage balance exceeds the property value (called being "underwater" or "upside-down" on your mortgage).

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

Q3: Does equity include home improvements?
A: Only if those improvements increased the property's market value.

Q4: How can I increase my property equity?
A: By paying down your mortgage and/or through property value appreciation.

Q5: Is equity the same as profit when selling?
A: No, equity doesn't account for purchase price, transaction costs, or capital gains taxes.