Homeowner’s equity is the value he can access that has built up in the home since the time of purchase. This value is a big asset because it can be used as collateral to borrow another loan that can be used for home improvement. To find the home equity of your house, you subtract the remaining mortgage balance from the current value of your home.
Here are the steps to follow to calculate your home equity:
Contact your bank and get the exact amount of balance remaining on your mortgage. This number is crucial for calculating equity.
Hire a professional appraiser. His role is to determine your house’s current or market value. The appraisal will tell you whether your home has lost or gained value since the purchase date.
Subtract the balance of your mortgage loan from the appraised value of the home and you will know your home equity. This is the amount you will use when asking for a loan.
Remember, buying a house is making an investment. Changes in the country’s economy and change of ‘status’ of an area can affect home equity. Appraise your house now and then to know its status.