In the CMA example, equity is calculated as which of the following?

In the CMA example, equity is calculated as which of the following?

• A. Mortgage payoff minus prorations
• B. Sale price minus mortgage payoff
• C. Sale price minus selling expenses
• D. Mortgage payoff minus selling expenses

Answer: (B)

Equity is the seller’s remaining interest in the property after removing the loan secured by the home. In a CMA, it’s shown as the sale price minus the mortgage payoff. This represents how much the owner would actually own after paying off the existing loan at closing, before counting selling expenses. If you wanted net cash to the seller after selling costs, you’d subtract selling expenses from that amount.

Equity is the seller’s remaining interest in the property after removing the loan secured by the home. In a CMA, it’s shown as the sale price minus the mortgage payoff. This represents how much the owner would actually own after paying off the existing loan at closing, before counting selling expenses. If you wanted net cash to the seller after selling costs, you’d subtract selling expenses from that amount.