How to Calculate your Home Equity

Learning how to calculate your home equity can come in handy in a number of situations. Your home equity is one of the most important things that you have as a home owner. You can use it for several different things including debt consolidation and improving your home. Here are some of the basics: 

Calculating Equity

The first thing that you need to do is determine the value of your house. You can estimate this figure or you be more accurate and get an appraisal report. Once the value of the home is determined, you also need to know what the balance of your mortgage is.

You can find your mortgage amount by finding your most recent mortgage statement; it will list your balance. You can also call your lender and ask them if you are missing your balance statement. After you have the two figures, simply subtract the amount that you owe from the value of the home. The number that you come up with is your home equity. For example, if your home is worth $200,000, and you owe $100,000, you have $100,000 in equity.

Most lenders will take a percentage of value; this is called LTV, or loan to value. In order to calculate your LTV, you would take $200,000 and divide it into your balance of $100,000. In this case, your LTV is 50%.