2006-08-23 14:24:35 · 5 answers · asked by axelf57 1 in Business & Finance ➔ Renting & Real Estate
Equity is your little window of opportunity. Say you buy a house for $80,000. You pay down the mortgage to $70,000 and have the house appraised, and it is now worth $110,000. Your equity is the difference between what you owe on the house and what it is worth. So in this example, you have $40,000 in equity. You could get a 2nd mortgage, also known as an equity line of credit, for that $40,000, or, you could refinance the entire house at $110,000 and pay off that $70,000 first mortgage and basically have that $40,000 in your pocket as cash--but now you owe more on your house and have no equity, so be careful.
2006-08-23 14:29:30 · answer #1 · answered by Anonymous · 0⤊ 0⤋
The equity in a house is the amount of any money you have paid in toward the purchase price of that house added to any amount that the house has appreciated in value since you bought it. If you bought a house twenty years ago for 80,000 and put down 30,000 as a downpayment you started home ownership with 30,000 in equity. If the same house is is now worth, say, 300.000, you have the 30,000 in equity plus the 220,000 that the house has appreciated.
Its important because if you wanted to get a loan you could get a loan against the equity in the house. Its also important because if you sell the house and pay off the mortgage you get money money if you have more equity.
If the mortgage is paid off, you have more equity.
2006-08-23 15:44:59 · answer #2 · answered by WhiteLilac1 6 · 0⤊ 0⤋
Equity is difference between what you owe on a property and what the property is worth (fair market value). And there can be a thing call negative equity, not as common on homes as it is in the car business, and negative equity is when you owe more on something than it is worth. Equity is important because it can be used to determine net worth and be considered as assests.
2006-08-23 14:48:37 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Equity is what you own in a property. Liability is what is owned by others in your property (the mortgage holder)
2006-08-23 14:29:49 · answer #4 · answered by Anonymous · 0⤊ 0⤋
difference between what its worth and what you owe....for example....
house is worth 225,000....mortgage is 150,0000
equity = 225,000-150,000 = 75,000
2006-08-23 15:32:38 · answer #5 · answered by Anonymous · 0⤊ 0⤋