What is equity?

Home equity is the amount of money in your home that is yours, that you don’t owe to anyone else (like a bank). When you first buy a home, your home equity is your down payment. Over time, your equity changes due to your home value going up or down and also simply by paying your mortgage.

Why is it important to know your home equity?

For most homeowners, their home equity makes up most of their net worth, far more than their savings, investments and 401k. If you don’t know how much you have, you can’t make decisions that protect it or even use it wisely. And when it comes time to sell your house, knowing your home equity helps you know how much money to expect in a check. All of these things can have a big impact on your financial health.

Why is hard to calculate on your own?

Your home equity changes when two things happen: when your home value increases or decreases and when you pay your mortgage. Each month, you pay a different amount of principal vs. interest, even though your monthly mortgage payment stays the same. This is because loans amortize. It’s hard for homeowners to keep track of both the fractional and varying amounts of their mortgage payment that go towards building equity and also what their home value is at any point in time. To learn more about this, watch this video on home equity.

How does Homeownering’s home equity report figure out my equity?

What we do is take the price you paid for your home and your down payment and mortgage information, and create a map of your mortgage. Then, knowing what you think your home is worth today, we calculate your home equity based on your home value and what you owe on your mortgage based on this particular month and year.

Why don’t you have support for people with adjustable rate mortgages at this time?

Because adjustable rate mortgages adjust their interest rates over time, it takes a different way of making a map of your mortgage. We have support for this in the works and you’d like to be alerted as soon as support is ready, sign up here.

Why don’t you have support for people who have refinanced?

We wanted to make this version incredibly simple, as it’s our first release. It’s a different set of questions for people who have refinanced, as the original home price is no longer relevant to the new mortgage and there is no down payment, for example. However, if you’d like to use the tool to simulate your refinance scenario, where the tool asks “What was your original home price?” enter your refinanced loan amount, and where it asks “What was your down payment?” put zero. Try it.

Why don’t you have support for people who have made extra principal payments?

If you’ve made extra principal payments, we can’t know, based on your home, down payment and mortgage information how much you still owe, and so, can’t tell you how much equity you have. To do this, you’d need to get your latest mortgage statement and tell us your remaining principal balance. We expect to roll out this feature shortly, so if you’d like to be notified (and get easy 2-step info on how to find your remaining principal balance), sign up here.

What if I want to re-run the report with different numbers, like a higher home value?

You can re-run your report at any time!