Determining Your Current Home Equity

“WITH THE DROP IN HOME PRICES AND HOME VALUES OVER THE PAST YEAR OR TWO, I’M WORRIED ABOUT THE AMOUNT OF EQUITY I MAY HAVE LOST IN MY HOME. IS THERE A WAY I CAN FIGURE OUT MUCH EQUITY I CURRENTLY HAVE”

To determine how much equity you’ve built up in your home, you’ll need to know the remaining balance on your mortgage (plus any other liens or a second mortgage) and the current market value of your home. You can find out your remaining loan balance with a simple phone call to your lender, but determining the current market value of your home is a bit trickier and not nearly as exact. The best way to get calculate your home’s current value is to compare your home to recent home sales in your neighborhood and have a professional appraisal done. This should give you a decent idea of your home’s current value. Once you have all of this information, subtract the balance of your mortgage from your home’s value. For example, if your home is valued at $225,000 and you have $150,000 left on your loan, the current equity in your home is $75,000. Although this is a fairly straightforward formula for determining home equity, keep in mind that home values change constantly and the equity you have today may be very different than the equity you have tomorrow. ∆