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 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.
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.
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