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Home Equity Line of Credit Formula

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Maximum Line of Credit refers to the maximum amount of money that a lender is willing to extend to a borrower under a revolving credit agreement. Check FAQs

MLC = MLVR \cdot AFVE - OMB

MLC - Maximum Line of Credit?MLVR - Maximum Loan to Value Ratio?AFVE - Appraised Fair Value of Equity?OMB - Outstanding Mortgage Balance?

Home Equity Line of Credit Example

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Here is how the Home Equity Line of Credit equation looks like with Values.

Here is how the Home Equity Line of Credit equation looks like with Units.

Here is how the Home Equity Line of Credit equation looks like.

14940 = 6.5 \cdot 3000 - 4560

14940 = 6.5 \cdot 3000 - 4560

14940 = 6.5 \cdot 3000 - 4560

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Home Equity Line of Credit Solution

Follow our step by step solution on how to calculate Home Equity Line of Credit?

FIRST Step Consider the formula

MLC = MLVR \cdot AFVE - OMB

Next Step Substitute values of Variables

∴

MLC = 6.5 \cdot 3000 - 4560

Next Step Prepare to Evaluate

∴

MLC = 6.5 \cdot 3000 - 4560

LAST Step Evaluate

∴

MLC = 14940

Home Equity Line of Credit Formula Elements

Variables

Maximum Line of Credit

Maximum Line of Credit refers to the maximum amount of money that a lender is willing to extend to a borrower under a revolving credit agreement.

Symbol: MLC

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Maximum Line of Credit

Maximum Loan to Value Ratio

Maximum Loan to Value Ratio is a financial term used primarily in mortgage lending to measure the ratio of a loan to the value of the asset being purchased.

Symbol: MLVR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Maximum Loan to Value Ratio

Appraised Fair Value of Equity

Appraised Fair Value of Equity represents the estimated market value of a company's equity, as determined by a qualified appraiser or valuation expert.

Symbol: AFVE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Appraised Fair Value of Equity

Outstanding Mortgage Balance

Outstanding Mortgage Balance refers to the remaining amount of principal that a borrower still owes to the lender on a mortgage loan.

Symbol: OMB

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Outstanding Mortgage Balance

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DSCR = \frac{NOI}{AD}

How to Evaluate Home Equity Line of Credit?

Home Equity Line of Credit evaluator uses Maximum Line of Credit = Maximum Loan to Value Ratio*Appraised Fair Value of Equity-Outstanding Mortgage Balance to evaluate the Maximum Line of Credit, The Home Equity Line of Credit refers to the highest amount of credit that a lender is willing to extend to a borrower under a revolving credit agreement. Maximum Line of Credit is denoted by MLC symbol.

How to evaluate Home Equity Line of Credit using this online evaluator? To use this online evaluator for Home Equity Line of Credit, enter Maximum Loan to Value Ratio (MLVR), Appraised Fair Value of Equity (AFVE) & Outstanding Mortgage Balance (OMB) and hit the calculate button.

FAQs on Home Equity Line of Credit

What is the formula to find Home Equity Line of Credit?

The formula of Home Equity Line of Credit is expressed as Maximum Line of Credit = Maximum Loan to Value Ratio*Appraised Fair Value of Equity-Outstanding Mortgage Balance. Here is an example- 14940 = 6.5*3000-4560.

How to calculate Home Equity Line of Credit?

With Maximum Loan to Value Ratio (MLVR), Appraised Fair Value of Equity (AFVE) & Outstanding Mortgage Balance (OMB) we can find Home Equity Line of Credit using the formula - Maximum Line of Credit = Maximum Loan to Value Ratio*Appraised Fair Value of Equity-Outstanding Mortgage Balance.

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Home Equity Line of Credit Formula

Home Equity Line of Credit Example

Home Equity Line of Credit Solution

Home Equity Line of Credit Formula Elements

Other formulas in Debt Management category

How to Evaluate Home Equity Line of Credit?

FAQs on Home Equity Line of Credit

Variable Name