How to Calculate Home Equity Percentage?

how to calculate home equity percentage

One of the many questions I receive from homeowners is, how to calculate home equity percentage? This is a very important question, as it is the one factor that can determine whether you can or should sell your home. It’s also a factor in refinancing for a better rate; or taking out some cash for debt consolidation, home repairs, or the like.

Knowing how much equity you have in your home also provides you with a better financial picture. Home Equity is simply the value of the ownership stake in your home. It is the difference between its current market value and the total sum of debts or liens (mainly but not exclusive to your primary mortgage) you have against your home.

How to Calculate Your Home Equity?

First, you can figure out the equity in your home by subtracting the amount you owe on all your loans secured by your house from its appraised or market value. For example, Nicole owns a house recently appraised at $500,000. Nicole subsequently owes ABC Lender $150,000 as a mortgage on her home. We can calculate Nicole’s home equity in the figure below:

(Current Appraised/Market Value) – (Mortgage Balance/Loan Balance) = (Home Equity Value)
$500,000 – $150,000 = $350,000

If you are interested in calculating your home equity percentage, you can do so by dividing your home equity value by the current appraised/market value of your house.
(Home Equity Value) ÷ (Current Appraised Value) = Home Equity percentage
$350,000 ÷ $500,000 = $0.7%

Loan-to-Value Formula

Another method of calculating the equity in your home is through the loan-to-value formula or (LTV formula). Lenders use this method in all cases when you are discussing encumbering your home with a loan. If you are interested in applying for a mortgage, Loan-to-Value Formula will compare the amount of the loan you are seeking against the current market or appraised value of your home.

To calculate your LTV, divide your current loan balance(s) by the current appraised or market value of your home. After that, the answer will be multiplied by 100 to find the percentage.
In the example given above, the $150,000 loan balance, will be divided by the $500,000 appraised value of your house. This will result in 0.3 multiplied by 100 equals 30% LTV for your home.

Take note that LTV can affect you if you must pay Private Mortgage Insurance(PMI). If you qualify to refinance, 80% LTV is the max you can borrow to avoid paying PMI. Nonetheless, these are easy ways to calculate your home equity. Remember that Both LTV and home equity values will be subject to fluctuations depending on the market value of your home.

If you are a homeowner and interested in finding out the value of your home visit our website at www.bascombrealestate.com. Visit the ‘What’s Your Home Worth’ tab or email us at customerservice@bascombrealestate.com, we are looking forward to hearing from you!

Reading is a GOOD Habit

Reading is a good habit. I had always been an avid reader; I could not find books fast enough, it seemed, to keep up with my voracious reading appetite!  But, when I found a book I forgot about (for over 3 years) and wanted to read but couldn’t even find it. I had to acknowledge I was just doing WAY too much!  I had filled my precious reading time with so many other things, and my quiet space had completely disappeared.

So, I have decided to return to one of my good habits this year and get back to my first love of reading.  And to keep it all the way 100, I do need to be held accountable because I am a productive procrastinator and WILL find a million things to do instead.

reading is a good habit

In order to do this, I am starting my 2022 reading list.  I am sharing with all of you some great books I’ve come across and writing down what I say I am going to do. I am keeping it to a reasonable number because I still need to find the time!  Here is my list for 1Q21:

  1. The Bible – I had started reading nightly……. but several weeks later I have some gaps unfortunately.
  2. The Wealth Cure – Putting Money in Its Place – by Hill Harper – I have literally had this book for 3+ years and found it in a bag from a National Black MBA conference, smh.

Please check in with me periodically and see where I am in my reading list, I am asking all of you to hold me accountable!  In addition, please provide some great reads in the comments to share with me and all who are lifelong readers and looking for a good book or two to get into. Note: I really love legal and political thrillers, big John Grisham and Vince Flynn fan! Connect with me on the Bascomb website so we can talk more about books! And remember, reading is a good habit!

Tips for DIY Home Projects for Beginners

For many homeowners, DIY home projects for beginners have become all the rage with the many home improvement shows, Home Depot classes, and Pinterest pages piquing your interest. So here are a few quick tips to find out if DIY is for you.

diy home projects for beginners

1. Know Thyself! If you don’t have a proclivity towards all things hands-on, artsy, and time-consuming, take it from me, Stay Away! (Thursday’s tip will be for people like me!). Starting a home project by yourself takes time and skills, so if you don’t know how tools work, get help from your friends!
2. Identify Your Need: If you do have the personality and penchant for DIY, identify the projects you need to accomplish and take them on one at a time. Don’t take on projects that you know are out of your alley. Huge projects that you think need more work could be done at a later time with a help of professionals.
3. Research: Take the time to research all retailers and/or wholesalers who may provide the supplies and items you need to complete your project. The prices can change drastically from your big box store to a wholesaler who specializes in the item(s) you need. Get recommendations from your friends who have done DIY projects before. For sure they will have leads on where to buy your supplies.
4. Invest: You are not only beautifying your home, but you are also adding appreciation to your investment. Don’t cut corners with respect to your finished product. A rushed and underbudgeted project will reveal itself! You’ll end up hating it in the long run.
DIY home projects for beginners are not easy especially if you don’t have any idea where to start. Watching videos and applying them to your projects is not easy! If you want more info on home upgrades, you can check more of our blogs too.

Difference Between Home Insurance and Home Warranty

When purchasing a new home, it’s important to do in-depth research on all facets of the homebuying process. One thing you’ll need to understand is how to best protect yourself and your investment if anything were to go wrong. Check out the information on home insurance and/or homeowners insurance versus home warranty below to educate yourself on your options.

home insurance

Home Insurance
If you ask “does homeowners insurance cover mold”, here is the answer. Homeowners insurance pays for any accidental damages and loss that are caused by fire, lightning strikes, windstorms, and hail. However, damage from earthquakes and floods is typically not covered. It also covers the replacement of personal property in case of theft or damage and liability if a person were to get injured in your home or on your property.

According to American Home Shield, the average annual cost of a homeowner’s insurance policy ranges between $300 and $1,000. The bank usually asks you to obtain a policy before the mortgage is issued. Make sure to keep in mind that each type of coverage in the policy is subject to a limit. In most cases, you will have to pay a deductible.

Home Warranty
America’s preferred home warranty is designed to cover the cost of repairs and replacements of larger appliances. It also covers crucial systems in your home that may fail or break due to age and wear and tear. This includes but isn’t limited to HVAC, electrical, or plumbing components, kitchen appliances, and your washer and dryer. With a home warranty, you are required to pay premiums year-round even if you do not use it. It won’t cover damages if appliances were not maintained properly or if the damage is from a fire or other disaster.

What to do with your Tax Return Money

It’s that time again, many Americans have filed their taxes, and some are fortunate enough to have received, or will receive a return! You probably have asked “how do tax return works”, “where is my tax return money” but once you get it, what are you going to do with it? If you are one of these tax-paying Americans with a net gain at the end of your 1040, here are a few things to consider doing with your tax return money:

tax return money

  • Invest! If you don’t need the cash for important things right now, talk to a Financial Advisor to help point you in the direction that is best for you.  I happen to know a few good ones 😉.
  • Pay down your debt; some folks may have a Christmas debt hangover and could use the extra cash to right their personal financial ship.
  • Increase your liquid savings; instead of just letting them sit, add them to your savings.  Or, start savings and set a goal for yourself to steadily increase it.
  • Buy a house! You can never go wrong with this strategy, contact us and we can get you started today!

Easy Landscaping DIY Projects

Ever get the itch to do a DIY project? Whenever we do, our favorites involve getting outdoors and mixing up our landscaping features.

Whether it’s as simple as installing some lighting or a little more time-consuming like re-plotting plants, a fresh look for the lawn always gives your home a fresh look as well. Here are our top five easy landscaping projects!

Create a pathway.

To guide you and visitors throughout your yard and link different areas together, install a pathway. You can use materials from a variety of materials, including reclaimed pallet wood, flagstones, gravel, and more to add texture and color.

Add a wall or border.

Installing a flagstone, rock, or brick wall around flower beds or trees adds a sleek, clean look to your landscaping and helps separate different sections of your yard.

Install a water feature.

Nothing says zen quite like the sound of trickling water as you relax in your backyard. You can start simple with by purchasing and installing a small feature powered by a solar panel or create a larger focal point in your yard by installing a waterfall wall or small pond.

Light your way.

An easy way to transform your yard is to strategically use lighting. Place cool-colored lights high in trees to recreate a moonlight feel, use pathway lights to naturally guide the eye, or highlight objects or plants.

Plant upwards.

Expand your yard space by drawing the eye to the sky with a trellis fence or screen made of wood or metal. Once you install your trellis, select your climbing plants and vines and get to planting!

Diversify Credit: How Credit Mix Helps in Homebuying

Diversify credit! Your credit mix is an important factor a lender/underwriter is reviewing when trying to qualify you to buy a home.

Although this pandemic has had an extremely negative effect on our lives, from a real estate perspective, it has created a great opportunity for those who are interested in buying a property. If you are in the market to buy now, very soon, or sometime in the future, it is wise to start looking at your credit. Just having the right credit score will not guarantee approval, your credit mix is just as important.  The term ‘credit mix’ encompasses the items that make up your credit as well as the age of your credit report.  

diversify credit

 

What’s a good credit mix?

Your credit lines (or tradelines) are very important; generally speaking, a good mix is 2 – 3 unsecured tradelines lines, i.e. credit cards, lines of credit, etc. 1 – 2 installment loan(s), i.e. a car loan and/or fixed-rate loan with the occasional student loan mixed in for a good number of us!  For your credit lines, you should try and keep your balances at 10% – 30% of the line amounts.  An example of this is if you have a credit card with a limit of $2,000, you want to keep the balance at no more than $200 – $600 while you are shopping for a home. 

The age of your report is also important, you may have a great score and all the tradelines lines needed, but if your credit is only 1-year old, additional questions may be asked and you may not qualify because you haven’t established your credit.  To verify your credit’s age, confirm how old your oldest tradeline is, which will determine the age of your credit.

Lastly, but most importantly, Do Not Use Your Credit While Homebuying! I can’t stress this enough to my clients who are buying.  One inquiry could make the difference in you being in contract to purchase your new home, the lender pulls your credit again at closing, and your score dropped because of that inquiry and you do not qualify anymore.  This is a sure-fire deal killer and I have seen it happen.  Don’t let it happen to you!

If you want to know more about diversify credit and homebuying, visit Bascomb website https://bascombrealestate.com and talk to us!

Create the Modern Home Office of Your Dreams

This new environment we find ourselves in has officially made my modern home office, my only office. With the majority of the world experiencing the exact same thing, the space you’re spending 90% of your time now has to be comfortable and functional.  Whether you have an available room for an office, or not, dedicating a workspace in your home can be designed to increase productivity and comfort.

Here are 5 ideas to get you started with your modern home office

modern home office

  1. Invest in a good office chair. Investing in an ergonomic office chair is essential. You may be spending anywhere from 30 to 50 hours a week sitting in it, so your back will thank you. Purchasing one with multiple adjustments is ideal so it fits you just right.
  2. Switch up your lighting. Fluorescent lighting has been proven to be hard on the eyes. Make the switch to LED or halogen light bulbs in your home office. Try to let in as much natural light as possible. Also, consider finding a desk lamp to reduce headaches and eye strain.
  3. Keep essentials within reach and organized. Nothing says productivity like a clean, neat workspace. Select a desk with a lot of storage. You can also install creative shelving to keep items like pens, pencils, extra batteries, calculators, notepads, and more stored within arm’s reach.
  4. Decorate bright. Pick a color you love and use it to spice up the room. Use cheery yellow or red or relaxing tones like green and blue, instead of beiges and browns.
  5. Aim for the view. If possible, place your desk so you are facing a window instead of a blank wall. Natural light can do wonders for staying alert. You can also give yourself a short mental break when necessary by looking to the outdoors.

Transforming a modern home office into a functional space could get tricky. But as long as you have the essentials first, you can expand it more and make it your own space.

Staying Accountable – Reading List

Back in January I talked about my return to good habits. The first one I discussed was getting back to reading, which was always an escape of mine. I realized as 2020 had come hurdling at us, I hadn’t read a book in some time.
Now that we are in Q2, I wanted to do my check in to keep myself accountable and let you all know I stuck with my goal! I finished 2.5 books last quarter and I am very glad I did. Given this corona virus, the timing couldn’t have been better with all of us house bound. With that being said, I decided I would give a quick synopsis of the books I read so that you can add a few new books to your reading list.

 

Killing Kryptonite – by John Bevere
This book changed me in the best way. In his book, John discusses the Christians battle with the things that distract us from a deep and profound relationship with the Father, he called it our kryptonite, liking it to Superman and his inability to function when kryptonite is present. If you are looking to remove the barriers and have a deeper relationship with Christ, I highly recommend it.

The Color of Money – Black Banks and the Racial Wealth Gap – by Mehrsa Baradaran
Talk about an intense history lesson! This book discusses black people’s experience with the banking system, the government and our legacy of exclusion from participating in the ‘American Dream’ of building generational wealth. Mehrsa gives an extraordinary breakdown of the history of that exclusion through government policy, both federal and local; how banking/finance works and its propensity to perpetuate its exclusion of black people from emancipation to present day. This is a must read!

Late Bloomers – The Power of Patience in a World Obsessed with Early Achievement – by Rich Karlgaard
Our society, scratch that, our world is obsessed with early achievement. From acing the SAT’s; getting into the ivy’s; making a million dollars before you are 25, society has shared a narrative that you must do the big things early in life. But what this book conveys, and I learned firsthand, is many people who have achieved did it later in life. In addition, late achievement brings with it a myriad of attributes that we, as a society take for granted. If you didn’t make it happen before 30 and you have that fire later in life, this is the book for you. (This is my .5 books, just about finish with it)

4th Stimulus Check – Where Will You Receive It?

Update: As of Oct 2022, the 4th stimulus check is going to be sent by 18 states as a response to record inflation. Read more here. 

The stimulus package has been passed and many Americans will receive a boost to their income in April.  If you meet the criteria set forth, you can receive at least $1200. But the question is; where will you receive this money?  Most of the money will be directly deposited to accounts tied to your last tax filing. But many members in our communities don’t have bank accounts. Whether it be from previous issues with a bank account you had. May it be mistrust, or a myriad of things, many in our community don’t have access to safe accounts.  

This means many people will receive paper checks and take them to an expensive check casher to get their money.  This doesn’t have to be the case! There are many financial institutions that provide bank accounts to people even if they owe another bank some money.  Aside from any previous bad experiences, the bank or credit union is the best, safest, and cheapest place for you to keep your money and conduct financial business. 

Click the links below to find out the stimulus criteria and banks and credit unions that can help you keep your money in your pocket. In addition, I have attached the BankOn Seattle-King County grid that will give you the list of banks in the state that can provide safe banking opportunities with their individual requirements. 

Stimulus Information

List of Financial Institutions

P.S. There are still no discussions of 4th stimulus check in Washington. 

About Us

Purposeful in providing the most personal of services, our firm is small in size by design in order to enhance the exceptional service we provide.  We are one of the premier real estate agents in Seattle Washington that prides ourselves in offering superior knowledge and skill making us the only choice for your real estate needs.