The difference between the value of a home and the amount of the outstanding mortgages against the home is equal to the home equity. When a homeowner is considering a home equity loan, the loan amount is based on the available home equity. Though the measure of home equity is the value of your home that is above the balance on the mortgage, most home equity lenders will only loan a certain amount of that available equity. A mortgage calculator can give the borrower an estimate of the available equity to help determine the potential loan amount and help ascertain the monthly mortgage payment on the home equity loan.
The mortgage calculator uses the estimated present value of the home and subtracts the current mortgage balance to arrive at the available equity figure. The mortgage calculator can also be used to take the estimated value of the home and multiply that by the loan to value percentage that the home equity lender will allow and then subtract the existing mortgage balance to arrive at the equity available for the loan. The formula for the mortgage calculator would like this; estimated home value x 75% ( an example of the maximum loan to value a home equity lender may establish ) = total available equity, minus the existing mortgage balance = the equity amount available for a home equity loan.
To determine the equity amount with the mortgage calculator it is dependent on the value of the house that is used. For the bank or lender, this value will be determined by a current appraised value of the home. Once this is determined, the amount of mortgage debt that would be used to establish the available equity by the bank and for use in the mortgage calculator should include the borrower’s first mortgage, second mortgages and any other debt that may be secured by the home.
The loan to value ratio for the mortgage calculator is the same ratio used by the bank or equity loan lender. The loan to value ratio is the percent of your home’s appraised value that the lender will allow for mortgage lending. For example, a 75% loan to value ratio for total mortgages on a $100,000.00 home would allocate $75,000.00 of the homes value for mortgage debt, including a home equity loan. If the home has a mortgage on it now with a balance of $60,000.00, the amount of available equity for the home equity loan would be $15,000.00. The bank or home equity loan lender will establish the maximum loan to value and they can vary greatly between lenders. Once the equity amount is determined, the mortgage paymnet calculator may also be used to ascertain the monthly paymnet for this loan. If the home equity loan is an adjustable rate home equity loan, the adjustable rate mortgage calculator should be used to determine the monthly payments.
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