If the thought of upgrading to your dream home has crossed your mind, understanding the equity you've built in your current property can be a game-changer. Equity can serve as a powerful financial tool, providing you with the means to secure a new home with favorable terms. In this blog, we'll explore the concept of home equity, how to determine how much you have, and how this valuable asset can pave the way for realizing your dream of homeownership.

What is Home Equity?

Home equity is the difference between the current market value of your home and the remaining balance on your mortgage. It represents the portion of your property that you truly own, as opposed to the amount you owe to the lender. As you make mortgage payments and your home's value appreciates, your equity grows over time.

Calculating Your Home Equity:

To determine how much equity you have, follow these simple steps:

1. Find Your Home's Current Market Value: Consult with a real estate professional or use online tools to estimate your home's current market value. Factors such as recent sales in your neighborhood, property improvements, and market trends contribute to this valuation.

2. Calculate the Remaining Mortgage Balance: Contact your mortgage lender to obtain the remaining balance on your mortgage. This is the amount you still owe on your home loan.

3. Subtract the Mortgage Balance from the Home's Value: Subtract the remaining mortgage balance from the estimated market value of your home. The result is your home equity.

   Home Equity=Current Market Value−Remaining Mortgage Balance