How Home Equity Works

Hey, everyone! I just want to take a quick minute of your time to discuss with you how home equity works. So basically, it’s the difference of what the home is currently worth in comparison to what you owe on the mortgage. For example, you get an offer accepted for a home for $400000, and then you get the home appraised, and it appraises for $425,000.

Well, you’re not going to pay more to the seller because you’re under contract for $400,000. So you’ll close on the home for $400,000 and now you have $25,000 worth of equity because the difference of $425k from a $400,000 home is $25,000. And also, if you currently own a home and you only owe $100,000 on that property, but the home is now worth $350,000, well, now you have $250,000 worth of equity.

So that’s basically it. Next week we’ll talk about what you can do with that equity. If you have any questions, leave a comment below. You can call or text me at 248-780-2521 or email me at [email protected]. Thanks and as always close with Patrice!

***To give you a little more information in regards to home equity, it’s important to understand that your home equity will greatly depend on the market that you’re in and other details that aren’t well known to the public, which is why it’s essential that you work with one of the best realtors that serves your area. It’s often the small details that can greatly impact a home’s value. As the market continues to shift from one of the strongest seller’s markets we’ve ever seen to a normal and possibly buyer’s market, the small details to determine a home’s value will become even more important. If you’d like to get a complimentary evaluation on your home’s value, please fill out our questionnaire here.