Getting more specific about your home equity

My instant equity report is designed to tell you important information about the net worth you have in your home. But there are certain cases where it’s important to do a little more calculating in order to get specific about your home equity.

For adjustable rate mortgages (ARMs), making extra mortgage payments and with home equity loans or lines of credit, here are the steps you can take to better understand your home equity.

If you have an adjustable rate mortgage

Since the Instant Equity Report can’t know when your mortgage has adjusted in the past, nor when it will adjust in the future, it just treats the mortgage rate that you enter as a fixed rate.

If you are in the period of your mortgage before it adjusts, then the report should give you an accurate reading of your equity today, as it has all the information it needs. But for future equity, at the 5 year and 10 year mark, that will depend on how your rate adjusts past the rate adjustment period.

To learn more about how adjustable rate mortgages adjust, click this link to see my video which explains how ARMs work.

If your rate has already adjusted, then you’ll want to do the following to find your current equity today:

  1. Get a copy of your mortgage statement, either online or a paper copy
  2. Find where it says “mortgage balance” or “remaining loan balance.” That is the amount you still owe on your mortgage.
  3. Take the estimated value of your home today and subtract out the remaining loan balance.

If you have made extra mortgage payments

As the Instant Equity Report can’t know what payments you’ve made in the past, and since extra payments are applied to your principal which effect your equity, you’ll want to do an extra step to find your exact equity for today:

  1. Get a copy of your mortgage statement, either online or a paper copy
  2. Find where it says “mortgage balance” or “remaining loan balance.” That is the amount you still owe on your mortgage.
  3. Take the estimated value of your home today and subtract out the remaining loan balance.

If you need help figuring out where on your statement you can locate your remaining loan balance, this video can help:

If you have a HELOC or home equity loan

Since a HELOC or home equity loan is money you owe to a bank in addition to a mortgage, you’ll want to account for this, so that you don’t mistakenly count it as part of your equity.

For the results in your report for current equity, equity at five years and equity at ten years, you’ll want to subtract from these figures what you owe on your HELOC or home equity line of credit.

Any questions? Feel free to email me at nicole@homeownering.com.