The equity in your house is the home’s value less the amount you owe on all the loans on the property.
Determining the amount you owe is straightforward. Find your most recent statement(s) on the loan or loans on the property and add them up. If the statement doesn’t show your balance call your lender and ask them how much you owe.
Determining the value of your property is a little trickier. The most accurate way would be to hire an appraiser to have them appraise your property. But this would require paying several hundred dollars for that information. A less costly alternative would be to contact a real estate professional in your area and ask them if they would be willing to do a Broker’s Price Opinion or a Market Analysis to give you an idea of your property’s value. Many real estate agents would be happy to help you at little or no cost. By helping you with information on the value of your home they position themselves to represent you if you ever decide to sell your home.
One other way to get an idea of the value of your home is to use one of the online sites that give estimates of home values. The down side of this approach is that they can be very inaccurate since they cannot take into account the individual characteristics or your specific home.
Once you have an idea of the value of your home subtract the amount you owe and you have your equity. More precisely you have your gross equity. Your gross equity does not include the costs involved if you sold the home to realize your equity. If you subtract the costs for selling your home you would then have an estimate of your net equity, the amount you would take away from closing if you sold your home.
Of course it may be that you don’t have any equity. If you owe more on the home than it would sell for then you have negative equity or are “underwater.”
Something to bear in mind IF you are underwater, is that the new HARP program allows borrowers with loans backed by Fannie Mae and Freddie Mac, originated by 5/2009, to refinance even if they have no equity. For more details, consult hud.gov or a lender such as myself that does HARP loans!