How to Calculate the Value of an Equity Line of Credit
- 1). Arrange for an appraisal of your home to determine its current market value. Check with your lender before paying for an appraisal to make sure the appraiser you choose is approved. Otherwise, your lender may reject the initial appraisal and you’ll end up paying for a second one.
- 2). Multiply the market value of your home by the borrowing percentage your lender states is allowable on your property. For example, if your home is appraised at $300,000 and the lender allows you to borrow 75 percent of that amount, your lender will extend a maximum of $225,000 in credit.
- 3). Subtract the principal balance of any mortgages on the home from the maximum amount of credit the lender will allow. Suppose you owe $150,000 on your mortgage. Subtract $150,000 from the maximum credit amount from step 2 ($225,000). The remainder of $75,000 is the value of your equity line of credit.
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