Foster Weeks | NMLS 253370

Your Home Equity

The importance of home equity

How do you determine home equity? Just think of home equity as a ratio:

In general, home equity is the amount of the home's current appraised value less any liens (mortgages) divided by the appraised value.

So, if your home is appraised at $500,000 and you have a $400,000 mortgage, your equity ($100,000) as a percent is 20%.

Your equity will increase or decrease, based on changes to the following:

  • When the value of your home rises, equity increases.
  • When the value of your home declines, so does equity.
  • When you reduce the principal mortgage balance by making your monthly payments, equity will likely rise (assuming the appraised valus stays the same or increases).

Ok, so how does this help?

After you've owned a home for a while, you may have seen an increase in equity due to paying down the loan, an increase in the home's value, or most commonly, a combination of the two. And during this time, you may also discover that you have financial needs like a home renovation, sending a child to college, unforseen medical expenses, etc. and would like to tap into this equity to fund these endeavors.

You can call me 1-415-345-4375, or email us to arrange a consultation today where I'll discuss your options and the ways you can leverage your home equity to meet these needs.