options for keeping your home
Calculating Your Home Equity
Equity is the amount of ownership you’ve already built up in your home. Knowing how much equity you have will help you better evaluate your alternatives. Your lender may also need to know this information to provide relief. How is equity calculated?
- Subtract your outstanding mortgage balance from your property’s current market value.
- Subtract the cost of the home improvements you’ve made from your property’s current market value.
- Subtract the mortgage payments you’ve made from your initial balance.
“A” is correct. Any money you owe on delinquent mortgage payments, second mortgages, or unpaid real estate taxes also will reduce your equity.