Saturday, April 2, 2011
Home Equity
Home Equity is the amount of money you have already paid against the value of your home. A simple form for determining your home equity is to subtract the amount of the Mortgage Balance from the current Fair Market Value of your home. In other words your equity increases as your mortgage balance decreases. For example: If your home has been appraised for $180,000 and you owe $100,000 on your mortgage, your equity is $80,000. Unless of course if you have a lein or second mortgage on your home, than you also need to subtract that amount from the appraised value to determine your home equity accurately. Many people put their established equity to work for them. They borrow against it and use the money for many things such as, home improvements, college tuitions, or purchasing additional properties.
Subscribe to:
Post Comments (Atom)
All you see on TV now are ads for "responsible homeownership." Where were these ads when banks and "lending institutions" like Countrywide were making 10's of thousands of loans to people that shouldn't have ever qualified? Minnesota is pretty ahead of the game in requiring many prospective home owners to take home ownership classes. One key thing I learned and LISTENED to was that you should keep at least six months of mortgage payments in the bank at all times. Most people don't do this and then wonder why when they lose their job why they are immediately fighting to keep their house. I lost my job and even though my "cushion" is mostly gone now, I'm STILL in my home because I KNEW what I was getting into. My brother just bought a house and hasn't a CLUE what he just did or got himself into!
ReplyDeleteNice blog! Good information- I always hear these terms, but never fully understood what they meant!
ReplyDeleteha! Now I know how they come up with all those different numbers. It's nice to understand professionals atleast half the time their talking. Thanks for the info
ReplyDeleteGood information. I hear people talk about equity and I never really knew what it was. But I do now. Thanks
ReplyDelete