Understanding your home’s equity provides you with an abundance of options for selling or refinancing your home. If your loan currently has private mortgage insurance as well as your loan’s balance is at 80 percent or less of the value of your home, federal law requires your creditor to eliminate mortgage insurance when you ask it. Supply your lender with evidence of your house’s worth and ask that it remove the mortgage insurance immediately.
Examine your annual tax bill. Usually the county bases the annual tax amount on its own valuation of your house. While this isn’t the most accurate way to determine your home’s true value, it is a place to start. This also enables you to ensure your house isn’t being overvalued by the county, causing you to pay unnecessarily large tax.
Determine what other homes are selling for in your area. Appraisers look at how much homes in your area have sold for in the past six months when deciding the worth of your home. Many states require that these earnings be a part of the public record. Some regional newspapers publish house sales. Zillow (see Resources) lists dwelling prices by ZIP code.
Examine the data you have gathered and make adjustments for differences in your house’s floor plan as well as condition. A three-bedroom house will sell for at least a two-bedroom home, and just two identical houses will fluctuate considerably in value if one has a newly renovated kitchen.
Telephone your house lender and ask a loan balance if your monthly mortgage coupon doesn’t already list it. Your lender’s site may also get this information available also. Subtract your loan balance from the own estimate of your home’s worth. Divide the difference by your house’s value to determine your home’s equity. Should you decide that your house is worth $250,000 and your loan’s balance is $200,000, you have $50,000 in equity. Divide this by $250,000 and you also get 20 percent. You therefore have 20 percent equity in your home.