How to Determine Your Equity Value

If you took out a mortgage to pay for your home some time back, there may be extra money hiding within its walls. Once the value of your home has increased above what you owe, you have what is known as home equity. The term “equity value” is much used synonymously with the entire equity of a given home loan.
When householders consider equity loans, the loaner will consider the equity built in the home. If the
home isn’t worth the amount applied for, the householder will pay higher rates of interest and
mortgage payments. Thus, the equity if negative is considered a higher risk than positive equity.
Still, the equity is factored by current market price, value of the home, and so forth to determine the
risks.

Loaners put risk first much as large sums of cash are involved. First time purchasers are provided
various types of loans, but are much risky candidates simply as equity is non-existing until
the closing is final. First time purchasers looking for home loans will be rated by their credit history,
employment, age, gender, the area considered to reside in, and so forth. If the buyer has excellent
credit, this is a plus to the loaner.

The loaner will much aid the borrower by getting adequate rates of interest and may even advise a
loan that would benefit the borrower moreso than other loans. Thus, when equity exists, this takes a
bit of the load off the loaner; however, if the home has “negative equity,” then the loaner is
threatened.

Therefore, if the loaner advises that your home has negative equity, you may prefer to request a
surveyor to test the homes value to confirm that the loaner is realistic. The surveyor will aid you to
determine the equity on your home, and if negative equity exist due to a drop in market value, you
may prefer to negotiate with the loaner, however, if negative equity exists due to structural damage,
mites, or other damage to the property, you may prefer to consider a different amount of loan to
borrow.