1. What is Home Equity?

Home equity represents the portion of your property that you truly "own." It's calculated as the current market value of your home minus any outstanding mortgage balance or other liens on the property.

2. How Does the Calculator Work?

The calculator uses the simple equity formula:

Where:

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

Explanation: This calculation shows how much of your home's value you actually own versus what you still owe to the bank.

3. Importance of Equity Calculation

Details: Knowing your home equity is important for financial planning, refinancing decisions, home equity loans, and understanding your net worth.

4. Using the Calculator

Tips: Enter your home's current market value and remaining mortgage balance in USD. For most accurate results, use up-to-date valuation from Zillow or a professional appraisal.

5. Frequently Asked Questions (FAQ)

Q1: How often should I calculate my home equity?
A: It's good practice to check annually or whenever your home's value may have significantly changed (after renovations or market shifts).

Q2: What is considered good equity in a home?
A: Generally, having at least 20% equity is ideal as it helps avoid private mortgage insurance (PMI) and provides better loan options.

Q3: Can my equity be negative?
A: Yes, if your mortgage balance exceeds your home's value (called being "underwater"), though this is uncommon in stable markets.

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

Q5: Is Zillow's estimate accurate for my home value?
A: Zillow's Zestimate is a good starting point but may not account for all factors. For precise valuation, consider a professional appraisal.