An extensive
experience in marketing equity products
with 3 of the largest national financial institutions
enables
the owner of Web-a-dex Internet Services to offer the
following tips and formulas:
Home Equity
Formula
(Appraised
Property Value) minus (Loan Balance) equals (Owned Equity)
Calculate the equity
owned in your home.
- Determine the appraised
value of your property from the last formal
certified appraisal or local tax statement. Do
NOT use what other houses sell for in your area,
or add money for improvements, unless reflected
in a certified or a tax appraisal. An appraisal
often includes appreciation of property value and
may be more than what you actually paid (hopefully!).
- Determine your Loan Balance.
This is the remaining principle that you owe. It
is NOT the sum of your remaining payments as they
include interest that is not yet due. Look on
your payment coupons, loan statement or contact
the mortgage holder for this figure under the
following terms: Unpaid Principle, Principle Due,
Principle Balance. Also include in your Loan
Balance anything else that uses the property as
collateral (such as a $10,000 second mortgage,
education or business loan that is collateralized
by the property).
- Subtract your Loan Balance
from your Appraised Property Value to determine
your owned Equity in your property. This is the
EQUITY that you own free and clear if you have
used the formula correctly. This is NOT the same
value that banks use to determine what they will
lend you in an equity program. Use the formula
below for that calculation. Your total owned
equity can be capitalized or liquidated in a
sale of the property, but not always by an equity loan as
explained below.
Loan to Value Ratio
(LTV)
(Available
Equity) equals (Appraised Property Value) times (LTV)
minus (Loan Balance)
How much money do I
have available for an equity loan in my state?
Lenders and state regulations provide three major levels
of loan to value
ratios across the United States. The most common LTV
ratios are
80%, 100% and 125%. Examples to show you how much you can
borrow.
- Check with lenders
in your area to determine what LTV's are
available in your state.
- Multiple your APPRAISED
VALUE by the
LTV value for your state and lender. Subtract your loan balance
as described above. This will determine your Available
Equity for lending purposes. If your Appraised Property Value is $90,000 with a loan
balance of $60,000, you would proceed as follows:
- At an 80% LTV ratio
your Available Equity would be $12,000.
At a 100% LTV ratio your Available Equity would
be $30,000.
At a 125% LTV ratio your Available Equity would
be $52,500.
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