Consolidating mortgage and home equity loan
A few years later, your home appraises for 0,000 due to a hot housing market.
If you’d paid the loan down to 0,000, you’d have 0,000 in home equity. If your local housing market takes a turn for the worse and the value of your property decreases, your equity decreases as well.
Your lender will be able to tell you the balance of your loan. To do this, look at the sale prices of similar homes that have sold near you.
To do the calculation, simply subtract your loan balance from your estimated home value.
In this case, your lender will likely require an appraisal to verify the value of the home.
Do you want to make improvements on your home but don’t have the cash on hand?
You can access the equity you’ve built for several different purposes, including lowering your payment, making home improvements, paying tuition and consolidating debts.
In this case, you would have ,000 of equity in your home as soon as you close.
With each mortgage payment you make, the balance of your loan decreases, and you build more and more equity (assuming your home value doesn’t decline).
The equity you own is equal to how much an appraiser believes your home is worth, minus the balance of your loan.
For example, let’s say you bought a 0,000 home with a 0,000 mortgage.