Home Equity

Definition

Home equity is the portion of your home that you actually own, calculated as the current market value minus any outstanding mortgage balance. For example, if your home is worth $400,000 and you owe $250,000, your equity is $150,000. You can build equity by making mortgage payments, paying extra toward your principal, or through appreciation in your home's value. Home equity can be accessed through HELOCs or home equity loans.