What does having 30% of equity mean?

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Sure.. the status of your existing ownership is not an issue as long as you do not apply for credit that exceeds the banks limit for your home. The only difference will be that this mortgage will be in 'first place' so if you ever wanted to take out a full mortgage you would have to close the equity loan because generally most banks will no longer subordinate this type of loan. One alternate scenario is to actually take out a new mortgage and bank the money. A 30 year mortgage (fixed) is around 5% right now as is an equity line of credit. With a 1% return from the bank on your deposit (at a minium) you can have a 100,000 bank account for about $4k a year (tax deductible). THen if something goes REALLY wrong and you might not qualify for another loan, you already have the funding... Plus if deposit rates rise in the next 30 years you would get some or all of your interest back. Sort of a cheap insurance policy.

30 Equity

First of all...Your mortgage consultant is a moron if they did not realize this was going to be a requirement at the time when you first spoke to him. They are blaming an underwriter for their mistake. This means your going to have to get an appraisal done on the property and that your loan balance cannot be more than 70 percent of the appraised value. This is always the requirement to use rental income from the home you are vacating. They are also failing to inform you in this email that you will need to provide. A.) a copy of a fully executed lease that proves the home will be rented for at least one year byond the date of the closing. B.) A copy of a cancelled deposit check showing the renter has paid you a deposit. C.) if this is a conventional loan (not FHA) you will have to show you have the funds to make both house payments for 6 months beyond the date of closing. if it is FHA this won't be an issue.

Like I said your loan person is an idiot. I would guess you went through some online boiler room like lending tree?

Just wait. Everything I just said is what it is going to be.

No, it does not necessarily mean that 30% of your mortgage loan is paid off. It means 70% loan to value.... if your home is worth $100,000 (as an easy example) you have loans totaling $70,000. That could mean you have made (or need to make) a down-payment of $30,000. It could also mean that the combination on paying down the mortgage and increased value of the property has caused a 70% loan to value. It is not the mortgage loan alone, but in combination with the value of the property.

In business or property, equity is the value remaining after liabilties or mortgage.

I often end up writing the same thing on other sites