Why agents care
Equity is what makes move-up purchases possible, and past clients often don't know how much they have. Equity updates are one of the most useful reasons to stay in touch with a sphere.
Glossary term
Home equity
Home equity is the difference between a home's current market value and the balances of all loans secured by it. It grows as the loan is paid down and as the home appreciates. Owners can access it by selling, or by borrowing against it with a home equity loan, a HELOC or a cash-out refinance.
Example
Example: a home worth $520,000 with a $300,000 mortgage has $220,000 of equity. At an 85% CLTV limit, up to $142,000 might be available to borrow, subject to the lender.
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Questions by topic
Home equity: common questions
How do homeowners find their equity?
Estimate the current value, ideally with a market analysis, and subtract the loan balances.
Can equity be negative?
Yes, if the home is worth less than the loans, often called being underwater.
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