Home Equity Calculator

What is Home Equity

home-equity-calculator

Home equity is the market value of a homeowner’s unencumbered interest in their real property—that is, the difference between the home’s fair market value and the outstanding balance of all liens on the property. The property’s equity increases as the debtor makes payments against the mortgage balance, and/or as the property value appreciates. Essentially, it represents the value of the ownership of the property because of the payments made by the owner over a period of time and the capital appreciation of the property.

home equity loan is a type of loan in which the borrower uses the equity in their home as collateral. Home equity loans are often used to finance major expenses such as home repairs, medical bills or college education. A home equity loan creates a lien against the borrower’s house, and reduces actual home equity

How to Calculate Home Equity

Home Equity is an important parameter used by the lender to judge the amount for which the borrower is qualified to borrow. They use various methods to arrive at this figure.

Here we present a simplified version of Debt to Income DIT Calculator.

 

Inputs Required to be Entered

Following inputs are required to be entered to run this Home Equity Calculator.

  1. Home’s Current Value: Your home or real estate’s current market value. Click the link icon (), if available, to bring up a website and look up your home’s current value.
  2. Maximum Equity: The maximum percentage of your home’s value that you can borrow with the equity loan or line of credit you are considering.
  3. First Mortgage Balance: The outstanding balance of your first or primary mortgage loan on this home or real estate.
  4. Second Mortgage Balance: The outstanding balance of any second mortgage loan on this home or real estate.
  5. Other Secured Balance: Any other amount of debt (besides a first or second mortgage) that uses your home or real estate as collateral. Include any existing home equity loan or home equity lines of credit.

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Output Results Calculated by Home Equity Calculator

Following results will be given after calculations.

  1. Total Home Secured Debt:  The total of your reported ‘Home Secured Debts’.
  2. Current Equity Amount: The amount of equity (or the amount you could pocket if you sold the property) you currently have in this home or real estate, based on your ‘Home’s Current Value’ and your ‘Total Home Secured Debt’.
  3. Maximum Home Secured Debt Allowed: The maximum amount of debt you can have secured using your home or real estate as collateral.
  4. Maximum Equity Available to Borrow: The maximum amount you can borrow against your home equity.
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Disclaimer

Lots of approximations and assumptions have been made while developing the calculators.

Please make your own calculations before making any financial decision.