What Is Home Equity?
Home equity is the value of a homeowner's current stake in their home. In other words, equity is how much of the home you own (versus how much the lender owns). Home equity is calculated based on the market value of the home minus the amount of mortgage still outstanding. Therefore, the value of home equity increases as payments are made on the mortgage and adjusts based on market forces that affect the current value of the property. The faster you repay the value of your mortgage, the quicker you will "build up" equity in your home.
Home equity is an asset, so it is calculated as a part of your total net worth. You can use your equity for additional loans or credit once you have built up sufficient equity in your home.
- What Is a Mortgage?
- What Type of Loan Should I Get for My Home?
- What Are the Different Types of Mortgage Loans?
- What Is the Process of Applying for a Mortgage?
- What Is the Difference Between a Housing Loan and a Mortgage Loan?
- What Is the Difference Between Government-Insured Loans and Conventional Loans?
- What Is a Down Payment?
- How Much Down Payment Will I Need to Provide?
- Are There Any Mortgage Loans with No Down Payment?
- What Is an Escrow Account?
- What Is the Difference Between a Loan and a Mortgage?
- How Do Mortgages Work?
- Where Can I Get a Mortgage?
- What Should I Look for in a Mortgage?
- Should I Pay My Mortgage Early?
- What Is the Average Mortgage Length?
- What Are the Advantages of a 15-Year Mortgage over a 30-Year Mortgage?
- What Are the Advantages of a 30-Year Mortgage over a 15-Year Mortgage?