Question 1

How do I calculate my home equity?

Accepted Answer

Home equity is your home's current market value minus your remaining mortgage balance. If your home is worth $450,000 and you owe $280,000, you have $170,000 in equity. As you make payments and your home appreciates, your equity grows.

Question 2

How much equity do I need to do a cash-out refinance?

Accepted Answer

Most lenders require you to retain at least 20% equity after a cash-out refinance, meaning you can borrow up to 80% of your home's value. Some programs allow up to 90% LTV (loan-to-value). VA cash-out refinances can go up to 100% LTV for eligible veterans.

Question 3

What is loan-to-value (LTV) ratio?

Accepted Answer

LTV is your mortgage balance divided by your home's appraised value, expressed as a percentage. An 80% LTV means you owe 80% of the home's value and have 20% equity. Lower LTV generally means better rates and more borrowing options.

Question 4

Can I access my equity without refinancing?

Accepted Answer

Yes. A home equity loan (second mortgage) or HELOC (home equity line of credit) lets you borrow against your equity while keeping your existing first mortgage and rate. This is a good option if your current rate is lower than today's rates.

Question 5

How quickly does home equity build?

Accepted Answer

Equity builds through two sources: your mortgage payments (principal reduction) and home price appreciation. In the early years of a mortgage, payments are mostly interest and equity builds slowly. Appreciation can add equity faster — Utah home values, for example, have appreciated significantly over the past decade.

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Home Equity Calculator

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