Home Equity Calculator
Are you a homeowner and want to know the value of your home equity? Look no further than this home equity calculator. Home equity is defined as the difference between the current value of the homeowner’s property and the outstanding balance of all loans on said property. This calculator allows for a quick and easy estimation of this figure, based on just three variables: the value of your home, the balance of your mortgage, and the loan-to-value ratio for home equity.
How to use it
To use the calculator, simply begin by entering the current market value of your home. Unlike when calculating the mortgage of a potential new home, this figure is not readily available. Instead, it must be attained through an appraisal, which is an investigation into the value of your home – this will cost a fee. Then, enter your current mortgage balance, which is amount that is still unpaid, excluding interest. Finally, enter the loan-to-value percentage, or ratio, as used by the lender. Clicking on “Calculate” will show the kind of loan you may be eligible for.
We will now run through an example so as to further explain how the calculator is used and test its functionality. In this example, a person is looking to take out a home equity loan on a property that is currently valued at $500,000. We enter this figure into the first box on the calculator, labeled “Home Value”. Secondly, let’s imagine that this person has an outstanding mortgage balance of $250,000 still to be paid. We enter this below, followed by the loan-to-value percentage which in this case we could say is 75%. Clicking on “Calculate” will show that the person would be eligible for a $375,000 loan, but since $250,000 is still owed, the credit limit would stand at $125,000.