What Is Equity?

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How to Determine Home Equity....5

Equity is basically the amount of a home that is not leveraged by a mortgage. Learn about the differences between what is owed on a mortgage and true market value with help from a financial specialist in this free video on home loans and money management.

Part of the Video Series: Home Equity Lines of Credit
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Video Transcript

When working with a first time home buyer, I'm asked a variety of questions relating to purchasing a home or owning a home. Hi, my name is Matt McKillen, I'm with Innovative Financial Group. One of the questions that's been posed to me is what is equity? Now I'll give you a brief definition of what equity is. Equity is basically the amount of your home that's not leveraged by a mortgage. Now to explain that in an easier term and to calculate it, basically if you had a 200,000 dollar home for example and let's say you only owe 100,000 dollars on your mortgage to your bank. The difference between the loan that you owe and how much your home is worth or could see for is basically 100,000, that is what determines what your equity is. It's basically the amount of the value of your home minus whatever you owe in liens on the property. So when someone is talking about their equity position in the property, again it's the different between what they owe on their mortgage and how much or the true market value of their property. Thanks for asking the question, my name is Matt McKillen with Innovative Financial Group.

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