Homeowners, ever wondered how to calculate your home equity?

by | Aug 30, 2023 | Client Resources

As a homeowner, the concept of equity is a fundamental aspect of your financial well-being and an essential consideration for various financial decisions. But how do you calculate your home equity?

Let’s break it down step-by-step! 

Image of a house on corner

1️⃣ Start with your Home’s Value

Determine your home’s current market value or estimated sales price. This can be based on very recent appraisals or by consulting with a realtor to conduct an analysis of your home’s worth. This figure will serve as your starting point for the equity calculation.

2️⃣ Subtract Mortgage Payoff

Subtract the outstanding balance of your mortgage from the home’s value and any additional fees associated with paying the mortgage off early. This gives you a rough idea of your equity, but we’re not done yet!

3️⃣ Account for Liens & Judgments

Consider any outstanding liens or judgments on your property. These are debts or legal claims that may affect your equity.

4️⃣ Factor in Deferments & Forbearance

If you have mortgage deferment or forbearance agreements, or HELOCs (Home Equity Lines of Credit), remember that these can impact your equity calculations.

5️⃣ Adjust for Solar Panel Contracts

If you have solar panels, account for any lease or contract obligations that may impact your equity calculations.

6️⃣ Calculate Your True Equity

Subtract all the outstanding debts, liens, judgments, and adjustments from your home’s estimated value. This gives you a comprehensive picture of your real equity.

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How I can help you calculate your home equity

Remember, equity can change over time due to various factors, so stay informed about your mortgage, property values, and review your finances regularly. As your equity grows over time, so does your potential for financial opportunities. Leveraging your home’s equity can be beneficial for various purposes, such as financing renovations, consolidating debt, or investing in other ventures.

I’m here to help.  If you would like to discuss your home’s worth and your potential equity in today’s market, feel free to reach out to me down below or fill out the Comparative Market Analysis request, and I’ll be in touch. 

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