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How does home equity work?

Even after googling it, I am still a bit confused...When calculating home equity, do you account for PITI or just principal? by kbukbk519 from Annapolis, Maryland. Sep 12th 2017 Reply


Corey Gee (cgee@perennialfunding.com)
#96 ranked lender in Pennsylvania - 16 contributions

I believe you are confused. The equity that you have in your home is simply the appraised value less any liens/mortgages secured by your property. In order to tap into your equity, you can obtain a home equity loan/line of credit, cash out refinance, or sell your property. If you need further assistance, please do not hesitate to contact me directly.

Sep 12th 2017
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,000 contributions

If your home is worth $500,000, but you owe $300,000, then your "Equity" is $200,000. As time goes on, your home could go up in value.. so your "equity" will increase... Also, each time you make a payment, a portion of that payment goes to lower the outstanding balance.. not the entire payment.. Understand that your monthly payment is a combination of principal, interest, taxes, insurance, and mortgage insurance.. but only the "Principal" portion of your payment goes to reduce what you own and therefore increases your equity.. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Sep 12th 2017
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