How to Calculate Your Home’s Equity: A Step-by-Step Guide
Your home equity is one of the most powerful financial assets you have. It’s the key to building long-term wealth and can provide financial flexibility when you need it most. But before you can use your equity, you need to know how to calculate it. Fortunately, the process is straightforward.
The Basic Formula for Home Equity
At its core, calculating home equity is simple subtraction:
Your Home’s Current Market Value – Your Current Mortgage Balance = Your Home Equity
Here’s how to find each of those numbers.
Step 1: Estimate Your Home’s Current Market Value
This is the price your home would likely sell for in today’s market. You can get an estimate from online tools like Zillow, by looking at recent sales of similar homes (“comps”), or by hiring a professional appraiser.
Step 2: Find Your Current Mortgage Balance
This is the exact amount you still owe on your home loan. You can find this number on your most recent monthly mortgage statement or your lender’s online portal.
Step 3: Do the Math
Now, simply subtract your mortgage balance from your estimated home value.
Example: Your home’s estimated market value is $400,000 and your mortgage balance is $250,000. Your home equity is $150,000.
Why DomiDocs is the Best Choice for Tracking Your Equity
Calculating your equity manually is a great way to understand the concept, but it’s a snapshot in time. The modern, effortless way to track your equity is with DomiDocs.
1. It’s Automated and Effortless
The DomiDocs Home Equity Tracker automates this entire process for you. We use industry-leading data to provide an up-to-date estimate of your home’s value and combine it with your loan information to show you a clear, real-time calculation of your available equity.
2. See Your Equity Grow Over Time
Our platform doesn’t just give you today’s number; it shows you a historical chart of how your equity has grown. You can visually track how your mortgage payments and market appreciation are building your wealth month after month.
3. A Complete Financial Picture
The equity tracker is integrated with the rest of your DomiDocs platform. This means your equity data lives right alongside your mortgage statements in your secure vault, providing a complete, 360-degree view of your home as a financial asset.
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