Many people use the equity in their homes to consolidate debt, make home repairs, pay for tuition, purchase automobiles and even pay taxes. The amount of equity you have in your home will determine how much money you can borrow. The information you need to calculate equity are the fair market value of your home plus the value of any mortgages on the property. If the value of your property decreases, so does the amount of equity you have.
Find out the fair market value of your property. To get the value of your home you can have it appraised. An appraisal might cost between $300 and $500 depending on your location. You can also find a rough estimate by visiting certain websites, such as Zillow (link in Resources), that provide property values in your neighborhood that have recently sold.
Check your most recent mortgage statement or call the customer service department of your mortgage lender to find out your mortgage balance. You will need all mortgage loan balances, so repeat as necessary. Additional mortgages are called second mortgages or home equity loans or home equity lines of credit, (HELOC).
Subtract the mortgage balance(s) from the property value. For example, if your home is valued at $175,000 and you have a mortgage balance of $90,000 your equity is $85,000, ($175,000 minus $90,000). If you refinance your home to tap into the equity, the equity decreases by the amount you borrow.
The website Zillow can provide you with a rough estimate of what the value of your home may be based on comparables. A comparable is a home that recently sold in your neighborhood that's similar in style, design and size. Enter your complete address in Zillow's search bar and click "Go" to see recent sales in the neighborhood.
If a creditor or contractor files a lien against your property because you failed to pay for work done, it will reduce the amount of equity you have by the amount of the lien.
In some states creditors are allowed to do the same thing when a debt such as a credit card debt is not paid. To get a lien filed, the creditor will have to take you to court. If the judge rules in favor of the creditor a lien can be filed.