One of the core benefits of choosing to buy a house is that you actually own the value of the property. Even if you’re making payments on a mortgage, over time, you’re actually building up equity with each payment — the amount of property value that belongs to you vs. how much you owe the bank.

Calculating equity may sound complicated or difficult, but it’s actually a pretty simple equation. Here’s the basics formula:

Home Equity = Home Value – Loan Balance

Pretty simple, right? Finding the right values is for this formula can be simple, too. Here are a few resources to help you calculate home equity quickly and accurately.

How to Find Your Home’s Current Value

Home value is essentially determined by how much your home could sell for on the market right now. Hour property’s selling price can change a lot from the time you first had your property appraised as market conditions and seasonality can have a big impact on home sales at any given time.

The quickest way to get an accurate estimate is with the infamous, instant Zestimate tool. Simply plug in an address, and Zillow.com will calculate your approximate home value based on public records and their own database.

Notice a big drop on Zestimate? Don’t panic! There are two important things to consider when you use this tool:

1.     The valuation in this tool is a quick guess based on current sales trends — that means your valuation will almost always go down in the winter months.

2.     Zestimate is not a true appraisal. What your home is worth must be assessed in person by a certified professional.

The “Zestimator” isn’t the only instant home value tool out there. Trulia, Redfin and even Realtor.com offer reputable alternatives for periodic value checks.

But, remember…

For a 100% accurate evaluation of your home's value, you should contact a professional appraiser — and you likely won’t need this until you’re ready to sell the house.

Why Does Knowing Home Equity Matter?

Since instant tools like the ones above aren’t always accurate, you may wonder why you should you bother using them to estimate home equity at all.

Here’s why — unlike every other asset you may buy with a loan (like a car or boat), houses almost always gain value. That means a house is more than an expense item, and your equity is a solid measure of your wealth.

Planning future wealth means understanding what you have in the moment and having that equity number in the back of your mind can help you make better long-term financial decisions.