If you have recently started browsing through the foreclosure listings Alberta has to offer then you may be wondering how foreclosures affect the equity of the home itself. There are a few easy tricks you can use to find out the current equity in your home or the home that you are looking to purchase. The amount of equity in your home is important for a number of different reasons but is mainly important if you are trying to refinance, get out of a foreclosure or get a loan against your home. So what is equity? Equity of a home is simply the amount of your mortgage deducted from the current fair market value of your home.
Before you can find out the equity you need some information first. The current fair market value of your home is the first thing you need to find out. You can get this information yourself by doing research or you can have a lender or Realtor appraise your home for you. Using the sale prices of similar homes around you though is usually a good way to determine your homes market value. From there you can move on with finding the equity of your home. For example, if your market value is $120,000 and you have $50,000 to repay on your mortgage than your equity is $70,000. However, you have to remember that your equity isn’t going to always stay the same so keep that in mind.
If you browse through any Alberta foreclosure list you can see that the equity of these homes can be much lower or even slightly higher, depending on the situation that the home owner ran into. With this unstable economy more and more people are losing their homes to foreclosure due to losing jobs, having an increase in their debt and even just trying to stay afloat each month.
The good thing is that you can increase the equity of your home just by doing some basic home improvements. However, always double check your changes because sometimes full renovations can often have a worse affect on the equity so just get it up to par. Another way your home’s equity can increase is from the value of the property around you. If the property values rise in your neighborhood, so will your home’s equity and that is without you having to do a thing. However, you have to remember that even though a home may be very nice if it is in a low property value area then you can’t expect much for home equity.
For those home owners out there with interest only mortgages may see a negative home equity as well. This is a downfall because your payments are basically going towards interest rather than the payment on the mortgage itself. Foreclosures in Canada can be very costly for the lenders too so you may be able to find some homes still in limbo to get a great deal on without sacrificing it’s equity at all.
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