How Does Your Home’s Equity Affect Your Finances

Snow Covered Home
Start Winterizing Your Home Today
November 14, 2016
Happy Person Who Refinanced
Change Your Life With a Mortgage Refinance
November 18, 2016
Two People Discussing Home Equity

Equity describes what the value of an asset is after subtracting any liabilities from the value of the asset. If you own a car that’s worth $25,000, but you owe $5,000 on a car loan, the equity is $20,000. Equity is our way of determining how much money you can take out of your home, and how much of your loan you’ve paid ff.

Find Your Equity

So, when calculating your Equity for your home, use that very simple formula.  Asset-Liability=Equity.  It’s pretty simple math when you know what you’re talking about.

Home Equity

Home equity is the only type of equity that we’re going to discuss here, although your vehicle or boat or other items could come into play in a Cash Out Refinance.

For individuals and personal finances, home equity is a valuable asset. You can use the equity you’ve built in your home to refinance and pay off credit cards, remodel, or whatever you want.  Using today’s lower interest rates, you can save money every month and take money out of your home.

Is Equity Important to Net Worth

Net worth works the same way as Equity, really.  It’s a subtraction of liabilities from your total value.  If you own a home, this is obviously a huge component to your net worth and can be important for credit applications and determining your quality of life and your ability to borrow for other things, such as a car or business loan.

This also affects your debt to income ratio, a huge component of your credit.  Knowing how much Equity you have in your home is a huge step towards understanding your credit and how much you can borrow.  You can also learn more about your personal financial situation by understanding your Equity situation.

Get Started

Call The Home Loan Expert, Ryan Kelley and take advantage of lower mortgage rates to buy your home or refinance and save money. Call us in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515 or Nashville at (615) 810-8555.  

You can always apply online at, and we’re also open on Saturdays to better serve you. Don’t forget to follow @TheHomeLoanEx on Twitter for breaking mortgage news and knowledge.  Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?