1. What is Total Equity?

Total Equity represents the actual ownership value you have in your home. It's calculated by subtracting your mortgage balance from your home's current market value.

2. How Does the Calculator Work?

The calculator uses the simple equity equation:

Where:

• \( TE \) — Total Equity (dollars)
• \( H \) — Home Value (dollars)
• \( M \) — Mortgage Balance (dollars)

Explanation: This straightforward calculation shows how much of your home you truly own versus how much is still owed to the lender.

3. Importance of Calculating Total Equity

Details: Knowing your home equity is crucial for financial planning, refinancing decisions, home equity loans, and understanding your overall net worth.

4. Using the Calculator

Tips: Enter your home's current market value and your remaining mortgage balance in dollars. Both values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What if my mortgage balance is higher than my home value?
A: This results in negative equity (being "underwater" on your mortgage), which means you owe more than your home is worth.

Q2: How often should I calculate my home equity?
A: It's recommended to calculate your equity annually or whenever there are significant changes in your local real estate market.

Q3: Does home equity include home improvements?
A: Yes, if the improvements increase your home's market value, they will be reflected in your equity calculation.

Q4: Can I access my home equity?
A: Yes, through home equity loans, lines of credit, or cash-out refinancing, though each option has different terms and implications.

Q5: How does equity affect selling my home?
A: Your equity represents the amount you would receive from the sale after paying off your mortgage and closing costs.