I want to buy a house and rent it out and i hear people using this word all the time and i dont understand what its meaning is?
2007-02-26 07:51:42 · 4 answers · asked by Idrive2004Bmwm3 1 in Business & Finance ➔ Renting & Real Estate
it's the difference between the value of your property and the amount of the loan you have secured on it. So if your house is worth 150k and your loan is 100k your equity is 50k. If your house is worth 100 and your loan is 150 you have negative equity of 50.
2007-02-26 07:58:00 · answer #1 · answered by gerrifriend 6 · 0⤊ 0⤋
Equity = property value minus debt secured by the property.
Ignore the other comment about avoiding investing in RE. Focus on learning as this question shows you are interested. It will take some time. There is a lot to learn.
Library, bookstores and other sources for information that is free or at some cost.
See the info and the URL below.
2007-02-27 08:35:07 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Equity, with regards to a house, refers to how much of the house you have paid for and 'own'. Someone has 100% equity in their home if they purchase it using cash. However, if you mortgage your house and make no down payment, that first day you have no equity.
After a few mortgage payments, you will see how much principal you have paid on your home (amount of the actual loan you have paid down) and how much interest you have paid. The total amount of principal you have paid down, plus any amount you paid in cash on your home to begin with (down payment) equals the equity in your home. Here is an example:
$100,000 purchase price.
Pay $10,000 down at the beginning.
Pay $10,000 in mortgage bills during a year ($9,000 interest, $1,000 principal)
The equity in your home is:
$10,000 down payent + 1,000 principal paid = $11,000
The remaining balance on your mortgage is:
$90,000 borrowed initially - $1,000 principal paid = $89,000
Hope this helps.
2007-02-26 15:58:44 · answer #3 · answered by jkersman01 3 · 0⤊ 0⤋
Then you have no business buying investment property.
But to answer your question
Equity is the $$$ difference between what you owe and it's value. so if the home is appraised for $100,000 and you owe $80,000 then you have 20% equity in that home or $20,000.
2007-02-26 15:56:58 · answer #4 · answered by golferwhoworks 7 · 0⤊ 1⤋