When I am using a mortgage calculator for a home equity loan, what is equity?

Equity is simply the value of the home minus any outstanding mortgages against the property.  For example, if a home’s current appraised value is $100,000 and the existing mortgage balance is $70,000, this means that the home owner has $30,000 or 30% equity in the home.  Since many home equity loans are for amounts up to 80% of the home’s value, if a home owner was using the mortgage calculator to determine the amount of equity available for a home equity loan, in this particular situation that amount would be for a $10,000 home equity loan.  When using the mortgage calculator, the amount used for the existing mortgage balance can be obtained by calling the lender who holds the mortgage and the home’s current value can be ascertained by comparing recent sales in the neighborhood.  Remember, the bank will make its own determination of what the homes value is by having the property appraised.

This entry was posted on Saturday, February 14th, 2009 at 9:03 pm and is filed under Mortgage FAQs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.