Simple Facts About Equity

Published by julia | Filed under Miscellaneous, Real Estate, Shout Outs

Equity is the termed used to describe the value of a home over and above the amount the home was mortgaged for. This means if the home was mortgaged for $180,000 and the home is valued at $250,000, there is a positive equity of $70,000 on the home. The homeowner has the ability to borrow money on the equity of the home, but that money will need to be repaid.

The trouble with borrowing on the positive equity of the home is the volatile nature of the real estate and home markets. If the equity in the home goes south and the homeowner will owe more than the home is worth.  The bank has the option then to demand the difference between the mortgaged amount and the amount that the home is worth.