Equity means value less every lien
Most people calculate equity as value minus mortgage. The complete figure subtracts everything recorded against the property: a second mortgage or HELOC, delinquent property taxes with their penalty and interest, HOA assessment liens, contractor liens, and judgments where they attach.
Those are exactly what a title search turns up, and they all get paid before you do. Knowing the full number before you make decisions avoids an unpleasant surprise at closing.
Why an online value estimate can mislead
Automated valuations work from sale prices, square footage, and public records. They assume a house in roughly average condition for its area. If yours has a failed roof, foundation movement, or an unfinished renovation, the estimate is describing a house that does not exist.
That gap is often the difference between what an owner expects and what any buyer will pay, and it is why we look at the property rather than working from a model.
Equity and a pre-foreclosure timeline
If you are behind on payments, equity is the most important number in the decision. A foreclosure sale typically wipes it out. A sale that closes first pays the loan, the arrears, the fees, and the other liens, and whatever remains goes to you.
The timeline depends on your state — Texas foreclosures are non-judicial and fast, Florida's run through the courts, Georgia uses a power of sale with four weeks' advertising, North Carolina requires a hearing before the clerk of superior court and allows a ten-day upset bid period. Our state guides set out each one.
Frequently asked questions
How do I find out what I really owe?
Ask each lienholder for a payoff figure with a good-through date, and ask the county tax office for the delinquent total including penalty and interest. Statement balances are lower than payoffs.
Do judgment liens attach to my home?
It depends on the state and on homestead protection. Texas homestead law blocks most general creditors' judgment liens, for instance. A title search is what settles it.
What if I have no equity?
A short sale or negotiated lien reductions may be possible. A HUD-approved housing counselor can walk through the options at no cost.
Does equity change what a cash buyer offers?
No. The offer reflects the property. Equity determines how much of the proceeds reach you.