Home equity is simply the dierence between your home’smarket value and what you still owe on your mortgage(today’s balance). For example, i you owe $80,000 on yourhome, but its market value is $100,000, then you may haveas much as $20,000 in equity.
Calculate your equity here:
Fill in the blanks below to determine how much equityyou may have.Your home’s current market value$____________(Find your home’s estimated value atwww.zillow.comorwww.homevaluecentral.com)*
Current mortgage balance– $____________Estimated available equity= $____________ You may be able to access your equity with one o these options:
- A home equity loan (sometimes called a fxed ratesecond mortgage)- A home equity line o credit (sometimes called aHELOC or short, pronounced “he-lock”)- A home loan refnance (also called cash-out refnance),where you pay o your existing mortgage with a newmortgage and get cash back.
*Zillow.com and HomeValueCentral.com oer homevalue estimates only and should not be reliedupon or actual loans.
Advantages o using your equity or extra cash:Consolidate debt using home equity
Debt consolidation (paying o your credit cards and otherdebt using the money rom your home equity) is one o themost popular uses o home equity. By using your home’sequity, you can oten get a lower interest rate than creditcards and other types o loans. Another big advantage isthat since you pay o all your other debts, you’ll likely haveewer payments every month.
Other ways to use your home equity
There are no limits on how you can use the extra cash youget rom your home equity. Other than debt consolidation,here are some other popular uses o home equity:
What is home equity?
• Lower interest rates than other forms of
• Flexible way to have cash available quickly• Usually a small amount of paperwork needed
• Interest payments are tax deductible in
• Can be a smart “emergency” account to help pay
or unexpected expenses
*Consult your tax adviser.
• Home improvement or repairs• Buying a new or used vehicle• School tuition and college costs• Medical bills• Weddings• Vacations• Start a business• Other large purchases such as a boat or RV • Investments such as rental property or land