Home equity refers to the difference between the fair market value of your home, minus the amount of liens or encumbered interests on your home. For most people a lien or encumbered interest means the balance remaining on your mortgage and/or secured debts- such as a secured line of credit.
If you are selling your home, and you have no liens or mortgages to pay out- your equity would be the amount you sold your home for.
For example- if you owned your home free and clear and the current appraised value or market value of the home is $400,000.00 you would have $400,000 in equity in your home.
If there was a mortgage and other secured interest that were claimed on the title of your home that added up to $200,000- then you would have $200,000 in equity:
$400,000-$200,000= $200,000.
Equity is not the same as liquid cash, it stays within the property itself.
To access or “cash out” your equity your either need to:
- Sell your property
OR - Refinance your property as a new first mortgage, second mortgage or adding a home equity line of credit.
Mortgage Sisters West are licensed mortgage brokers who serve all of Alberta, with a focus on our local Edmonton, Sherwood Park, St. Albert, Fort Saskatchewan, Spruce Grove, Stony Plain, Beaumont, Leduc and surrounding areas!
We are mortgage brokers franchised with our National Brokerage Mortgage Architects and can broker your mortgage in other provinces as well. We would love to work with you!