Home equity

[77017]

Can anyone explain what equity is, and what a home equity loan is and the reasoning behind all this?

[jm1fd]

Can anyone explain what equity is, and what a home equity loan is and the reasoning behind all this?

Equity = (Value of House) - (Remaining Loan Principal)

A home equity loan is a loan secured by the equity in the house. The reasoning is, let's say you want money to remodel the kitchen. You go get a HEL to pay for it.

In Texas, if your equity is less than 20%, then you can't get a HEL.

[Parrothead]

Equity is what you have paid into your home. For instance, if you bought your house 5 years ago, for $200,000 and you put $10,000 down, the equity you have in your home is 10,000 plus any principal you have paid toward your loan since you bought it. A home equity loan is for people who have enough equity in their home that they can take some of it out to do home improvements, etc.. Banks usually require you have a certain amount of equity in order to give the loan AND it cannot exceed a set limit, for instance, if you have $15K in equity, a bank will only give you a set percentage of that...they won't give you the whole thing back.

Hope that helps.

*edited to add: yeah, what jm1fd said.

Edited May 12, 2006 by Parrothead

[jm1fd]

Equity is what you have paid into your home. For instance, if you bought your house 5 years ago, for $200,000 and you put $10,000 down, the equity you have in your home is 10,000 plus any principal you have paid toward your loan since you bought it.

Actually...that isn't quite correct. You forgot to include appreciation.

[Scharpe St Guy]

Equity: (Appraised Value of Home) - (Amount Owed) = Equity

Example 1: $200,000 - $150,000 = $50,000equity

Banks will generally only loan up to 80% of Appraised Value though.

Example 2: ($200,000 * .8) = $160,000 - $150,000 = $10,000 Available as a loan.

Equity is a moving number based upon amount put down upon purchase, payments made, extra payments made against principal, and last but not least appreciation of the land and home value. A realtor could provide a ballpark number of what comps are selling for in your neighborhood but an appraiser would make the final call as to Present Value of your home.

Scharpe St. Guy

[77017]

Equity: (Appraised Value of Home) - (Amount Owed) = Equity

Example 1: $200,000 - $150,000 = $50,000equity

Banks will generally only loan up to 80% of Appraised Value though.

Example 2: ($200,000 * .8) = $160,000 - $150,000 = $10,000 Available as a loan.

Equity is a moving number based upon amount put down upon purchase, payments made, extra payments made against principal, and last but not least appreciation of the land and home value. A realtor could provide a ballpark number of what comps are selling for in your neighborhood but an appraiser would make the final call as to Present Value of your home.

Scharpe St. Guy

Damn dude, is this what you do for a living?

[Scharpe St Guy]

No not really, I am Director of IT for a home builder, Real Estate Agent for Myself & Friends, and Owner of a small water vending business.

I hope it helped you.

Scharpe St. Guy

Damn dude, is this what you do for a living?

[Trophy Property]

No not really, I am Director of IT for a home builder, Real Estate Agent for Myself & Friends, and Owner of a small water vending business.

When you say small water vending business, what do you mean. DO you own those big machines where people bring a jug and fill up. What is up with those? How does one make any money when you get $.25 per jug? Is the water purified in the machine? Is there a meter attached so the City knows how much to bill you? I always wondered about those big machines. If this in fact what you are referring to please fill me in on the details. I am curious as hell? Thanks.

[Scharpe St Guy]

Trophy,

Yes you know the machines.

Same logic as selling a McDonalds Hamburger for xxCents (What is it now???).

Ok first off the machines pull water from the location which originates from the City. So in theory we should have decent water, perhaps not great but good enough per the EPA, State, City and other Health Standards. The water is then passed through a series of smaller micron filters (4) including a Carbon (Taste/Odor) filter and is deposited into the internal tank reservoir.

Upon deposit of 25cents for 1 gallon the water is pumped from the Reservoir through an additional Carbon and a UV (Ultraviolet light) filter which kills anything remaining/living in the water. So we start with city and pass through approx 6 filtering devices some machines may have one or two more or one less. RO (Reverse Osmosis) use to be and still is somewhat common in some areas of the country however in some dry areas such as Phoenix these are strictly regulated and or prohibited due to the waster factor. For every 1 gallon of water passed through the RO 4-10 gallons is passed into the drain as waste water.

RO can get expensive both in water costs and the internal membrane.

Ok now vending is a great industry, depending upon the machine usage/vends is how often you need to go service the machine to restock, clean, etc

[Trophy Property]

Trophy,

Yes you know the machines.

Same logic as selling a McDonalds Hamburger for xxCents (What is it now???).

Ok first off the machines pull water from the location which originates from the City. So in theory we should have decent water, perhaps not great but good enough per the EPA, State, City and other Health Standards. The water is then passed through a series of smaller micron filters (4) including a Carbon (Taste/Odor) filter and is deposited into the internal tank reservoir.

Upon deposit of 25cents for 1 gallon the water is pumped from the Reservoir through an additional Carbon and a UV (Ultraviolet light) filter which kills anything remaining/living in the water. So we start with city and pass through approx 6 filtering devices some machines may have one or two more or one less. RO (Reverse Osmosis) use to be and still is somewhat common in some areas of the country however in some dry areas such as Phoenix these are strictly regulated and or prohibited due to the waster factor. For every 1 gallon of water passed through the RO 4-10 gallons is passed into the drain as waste water.

RO can get expensive both in water costs and the internal membrane.

Ok now vending is a great industry, depending upon the machine usage/vends is how often you need to go service the machine to restock, clean, etc

[Scharpe St Guy]

Thanks Trophy,

Yes the machines can be very expensive to purchase, in the ball park of $5,000 - $6,000 new. I am not aware of anyone who leases the machines.

Here is one on Ebay: http://cgi.ebay.com/Water-Vending-Machine-...1QQcmdZViewItem

Scharpe St. Guy

Very interesting. You have a knack for breaking things down. Are the machines expensive to purchase / lease?