When dealing with your mortgage, in the beginning stages or throughout, there are likely going to be some terms that you don't immediately understand. Before choosing the right mortgage plan for that real estate one might need to learn the difference between fixed and variable rates. And as you've sat with your mortgage for a few years you might run into the term "home equity." Well this article is meant to tell you exactly what that means and how it applies to the rest of your finances.
Home equity is the value of your home minus the amount that you still have left to pay for your mortgage. So, for example, if you were to own Scarborough real estate that is worth $250,000 and you have $100,000 left on your mortgage than your total home equity would be $150,000. This is a number that will change over time. Usually it will be going up as you pay off more and more of your mortgage loan. But it can also go down. If the homes for sale in your area are lowering in value than your home equity amount will likely suffer as well. It is always dependant on the current market conditions.
While some people simply have one mortgage to think about, others might have liens on their property or have taken out a second mortgage over time. This would also affect your home equity amount. You are going to need to take these additional subtractions into consideration if you're calculating your home equity in order to get a new loan or for some other purpose. Compliments of Abba Pump Parts & Service
Many people choose to use their home equity to qualify for an additional loan. This could be used to pay for a child to go away to college or could be to do some renovations on your home to bring it up to date with the other homes in your area. Some people are nearly able to borrow the full amount of their home equity but you should do this with caution. Your home is the collateral on this loan.
Another option is to get a home equity line of credit. This is usually for about seventy-five percent of the equity on that real estate and you can simply take out money from it when you need to. This is a better choice for those who might not need the full amount that would come with a loan.