Equity is derived by way of two simple formulas:
Market value as determined by sales price – mortgage balance
Market value as determined by an appraisal – mortgage balance.
If you don’t want to sell your house or pay for an appraisal an approximation can be reached by asking a local real estate agent for an opinion of value or, just to satisfy your curiosity, one can use Zillow.com or other internet sites to obtain an estimate of market value and then subtract from it your mortgage balance.
I suspect, however, that you are asking the question because you are either in the preliminary stages of doing a cash out refinance or want to get rid of private mortgage insurance (PMI). In the case of refinancing you will have to get (and probably pay for) an appraisal but Zillow or an opinion of value may give you advance information that will enable you to decide if it is worthwhile. Lenders vary in their requirements for removing PMI so contact them upfront. The process it isn’t easy nor is it cut and dry.
Finding out how much equity you have in your home is actually very simple. First you need to find out how much your home is worth. You can do this in many different ways but the most accurate would be to get an appraisal done on your home.
If you are not willing to pay out the money to have your home appraised you can use any of the home value search engines such as Zillow or Cyberhomes. Once you determine a ball park estimate of what your home is worth, subtract that by what you currently owe on your home and that tells you how much equity you have in your home.
Your home is worth $100,000
You owe $60,000
You have $40,000 in equity.