Equity

• The amount of equity you have in your home is one of the factors that determine how much you can borrow. Equity is determined by subtracting your mortgage balance from the fair market value of your home.
  
  

Significance

• A home equity payment calculator helps you determine the amount of your monthly payment using specific loan amounts. For example, a loan in the amount of $25,000 with a fixed interest rate of 6 percent and a term of 15 years will have payments of $210.96. These are the terms for a home equity loan.
  
  

Features

• If you have an interest-only loan, which is a home equity line of credit, your monthly payments would $125 for a loan of $25,000 with the same interest rate and term. The monthly payment is less because none of the payment is going towards the principal balance.
  
  

Considerations

• The home equity payment calculator will reveal that your monthly payments will decrease with a longer term.
  
  

Types

• A home equity loan allows you to borrow a lump sum of money right up front with a fixed rate. A home equity line of credit (HELOC) allows you to access a line of credit over and over again up to your credit limit. The rate is variable. You only pay the interest on a HELOC, so the balance never changes. At some point, you will need to refinance or pay off the balance.