How much equity do I have in my house : Bad Credit Advisor

How much equity do I have in my house

The answer could be as simple as one to the question - how much my house is worth? In the most straight forward case which applies to average home owner, equity in your house is equal to the difference between its market value minus mortgage. If you have more than one mortgage, you add them all and then subtract from potential market price or appraised value.

The appraisal must be recent, within 2 months at the most as prices fluctuate frequently, going mostly lower. If you are selling, always count on some 10% less, and that is after broker commission and property tax credit you give to a buyer. The fact if your property has just appraised in $300,000, doesn't necessarily mean you can get it. First, the buyers are currently looking for bargains and try to low ball, and second, by the time you find one, the home prices in your area might go lower yet again. Not too comforting.

If you are looking to take some cash out, you must refinance, so check you credit score, your income and assets and talk to mortgage broker or bank loan officer on how much cash you can get. Ask them to spell out all fees and costs. Check if they know and they should, if you live in so-called declining market, and if you do, you are likely to have more problems. As you see, the simple answer how much equity do you have in a house gets a bit more complicated.

It gets even more convoluted if you buy a foreclosure or a short sale or simply get lucky and grab it way below current market, and try to refinance and take your cash out, at least partially. Extremely important to check in advance what is the policy for your area with some local and nationwide lenders. There could be restrictions on how soon you can get your money out. So if buy such a house and hoping to get most of your payment back to remodel and resell it, make sure you can get it done within a reasonable time frame, otherwise that much equity you counted upon, may become this little in 6 months. The bottom line is that within certain time frame, you may not realize any equity other than by selling.

That brings us to the question of remodeling. The heydays when you put $50,000 in a house and then sell it for $100,000 profit are obviously long gone, but judging from the questions we receive, many people are still looking to do just that. It only makes sense if you want to live in your place for some time and enjoy it, not because you want to built much more equity in your house and make money on the top of it. If you remodel your house nicely and do it economically, this will help to sell it for sure a lot quicker than competing homes in your area. Basically, this is the way to preserve your existing equity or slow down its deterioration. I would recommend consulting your local realtor to see what is the best way to accomplish something like this, and not the remodeler whom you are looking to hire for the job.

Sat Jan 3, 2009 12:01AM by Tony | More in Mortgage | Comments (0)

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