What Is Equity Valuation?

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Home equity valuation is determined by calculating the difference between a mortgage loan and the value of the property. Have a house appraised for value to help determine the equity valuation with advice from a mortgage broker in this free video on home equity.

Part of the Video Series: Home Equity Loans & Foreclosures
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Video Transcript

Hi, this is Matt McKillen with Innovative Financial Group. A question posed to me today is, What is equity valuation? Equity valuation is kind of similar to an appraisal on a property. The only difference is, is that on an appraisal you're trying to determine what the market value of a home is, you know what it's worth. With an equity valuation it's a similar process. You still have to determine what the value or what the property value is to start. But in determining equity, what you do is if, let's say you do an appraisal on your property and it appraises for a hundred and fifty thousand. But then it turns out that you have a mortgage or loan on your home for a hundred. Well we know the value of the property or the fair market value is one fifty, but the value of the equity is actually the difference between what your home is worth and what you owe on it. So, in that example I just gave, the equity valuation would be fifty thousand dollars which is the difference between the hundred thousand dollar loan and the hundred and fifty thousand dollar value that was achieved by doing either a market analysis or an appraisal on your property. So again, the valuation of equity is the difference between the mortgage or loan that you have on your property and what your property is worth. So you subtract the mortgage amount from the property value and that is how to determine what the value of your equity is.

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