What is Home Equity?
How to calculate Home Equity
Let's assume that John Doe pays $200,000 for a house. He principal payments over the next few years. At that point, John Doe's home equity is about $55,000 ($40,000 of down payment plus $25,000 of principal payments).20% down and makes another $25,000 in
The amount could be higher if John's house has appreciated. For example, if John has$55,000 into the house and the house has increased in value by $10,000, then John's home equity is really $65,000.
Why does Home Equity matter?
Home equity is an asset, and some people can borrow against that asset. These loans, called home equity loans, are very similar in concept to traditional mortgages. For example, home equity loans generally must be repaid over a fixed period. Some lenders may fixed rates on these loans, others might variable rates.
Home equity loans can be viable options when compared to unsecured loans. In addition, interest is tax-deductible, making the interest rates on home equity loans sometimes lower than they appear when one considers the tax savings.cards or other high-interest,
However, not all home equity loans are created equally. Borrowers are well served to compare fees, interest rates and terms among lenders. After all, when a borrower defaults, his or her home could very well end up belonging to the bank for good.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.