The simple math
If your home is worth $450,000 and you owe $300,000, you have $150,000 in equity, or 33%.
How equity grows
- Monthly principal payments
- Extra payments toward principal
- Rising home values
- Improvements that add value
Using your equity
You can tap equity with a cash-out refinance or a home equity loan. Lenders limit how much you can borrow against your value.
Equity over time
On a $400,000 home bought with $40,000 down, a 30-year loan at 6.5% pays down about $50,000 of principal in the first 10 years. If the home rises 3% a year, equity grows from $40,000 to roughly $230,000.
How lenders see it
- Cash-out refinance: limit depends on the loan program
- Home equity loan: limit depends on the loan type and purpose
How to check yours
- Find your latest mortgage balance
- Estimate your home’s value
- Subtract any loans secured by the home
- Divide your balances by value to see loan-to-value
Ways to use equity
- Home equity loan: fixed lump sum, keep your mortgage
- Cash-out refinance: one new, larger loan
- HELOC: flexible line of credit (CapCenter doesn’t offer HELOCs)
- Sell and use the proceeds
How much you can tap
How much you can tap depends on your home’s value, what you owe and the loan program. A cash-out refinance’s limit depends on the program, and a home equity loan’s limit depends on the loan type and purpose; your loan consultant can tell you yours.
Protecting your equity
- Keep up maintenance
- Avoid borrowing more than you need
- Keep insurance coverage current
- Pay extra principal when you can
Equity and your next move
When you sell, equity becomes your down payment. Where we offer realty services, CapCenter can coordinate the sale and purchase. Our standard listing fee is 1.5%, with a $3,000 minimum. Sell with us and buy, or finance, your next home with CapCenter within a year, and it’s 1%. Your next loan can come with ZERO Closing Costs (restrictions apply).
