How to calculate home equity

How to calculate home equity Now that you know what home equity is, you probably want to know how much equity you have in your own home. Knowing roughly how much equity you have is helpful if you’re thinking of selling, and it’s also an important factor if you’re considering a home equity loan or line of credit — Your home equity is your personal financial investment in your home. Generally speaking, it’s your home’s fair market value, less any mortgage balances or existing liens — including the balance you owe on your mortgage. 59% of homeowners are still paying a mortgage on their homes. 1. Find out what your home is worth Depending on when you purchased your home, it might be worth more or less than you initially paid for it. Reach out to #SELL --- https://www.dna-realty.com/sell/ Here’s an example to walk you through the calculation: You purchased your home in June 2015 for $500,000 with a 20% down payment and a 4.07% interest rate. Today, your home is worth $1,200,000.00 2. Subtract your loan payoff amount Now you’ll want to factor in your remaining mortgage balance. Contact your mortgage lender to get a loan payoff amount, which is also called an estimated settlement statement. Note that your loan payoff is not the same as the loan balance you see on your monthly payment. A loan payoff factors in interest up to your estimated closing date, whereas your statement is only calculated once a month. Your loan payoff might also include a prepayment penalty if you’re selling soon after buying. For the purposes of this exercise, we’ll assume your closing date is today. If you don’t have a remaining mortgage balance, your equity is equivalent to your home’s current market value. Example: Keeping the same example as step one above, with your 20% down payment, you originally borrowed $400,000. After six years of monthly mortgage payments, your loan balance as of June 2021 is $276,472 with your 4.07% interest rate. 3. Take the difference as your equity Subtract your loan balance amount from your home’s current market value. Example: Fair market value of $1,200,000.00 minus $276,472 in loan payoff amount equals $923,528.00 Remember, that doesn’t mean you will pocket every dollar. At closing, you’ll still need to pay closing costs, which can include taxes, escrow fees and agent commissions, all of which can total 8% to 10% of the sale price. If you really want to sell your home and get your profit, you may also want to subtract any money you spent getting your house ready to sell, like home improvements, repairs or staging. Ready to sell? Go To #SELL --- https://www.dna-realty.com/sell/