Home Equity: Loan Options, How To Calculate And More

Tapping into home equity allows homeowners the financial freedom to pursue home improvements that add value to their home, consolidate high-interest debt or pay for unexpected expenses.

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What Is Home Equity?

Learn About Home Equity

Home equity is the difference between your home’s current market value and the amount you still owe on your mortgage and any other loans secured by the home. A home may have positive equity or negative equity (if the amount owed on outstanding loans exceeds the home’s value). Negative equity is commonly called “being underwater” or “upside down.”

How Equity Grows

Equity grows in many ways. A down payment on a new home may establish immediate equity. Home improvements that increase the property’s value may also increase equity. Market conditions and rising or falling home prices also influence home equity.

Benefits Of Home Equity

Equity in a home provides a cash value to homeowners. Home equity loans offer flexibility for homeowners to consolidate their debt, renovate their homes or pay for emergency expenses. Using home equity converts unsecured debt into secured debt, meaning the home is at risk if payments aren’t made. Equity also may provide the down payment for a new home when the sale value of the current home exceeds the mortgage balance.

Calculating Home Equity

Discover the amount of equity you have in your home, and learn how much you can borrow.

Explore Home Equity Options 

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What Are The Benefits Of Home Equity Loans?

Financial Flexibility
Home equity loans, a cash-out refinance and home equity lines of credit allow homeowners to use the funds for any financial need.
Lower Monthly Payments
Home equity loans often have lower interest rates than credit cards, which may reduce borrowing costs. Homeowners can compare lenders to find the best interest rate and terms for the most affordable monthly payment.
Free Up The Budget
Tapping home equity may provide an alternative source of funds without liquidating savings or investments.
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Learn more about how tapping home equity works, when it makes sense to do so and what you need to do to get approved.

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Frequently Asked Questions

Here are answers to common questions about home equity.

Home equity can be used for a variety of purposes, including home improvements, debt consolidation, education expenses and major purchases.
You can estimate your home equity by subtracting your remaining mortgage balance from your home’s current market value.
A home equity loan provides a lump sum of money that you repay over time typically with fixed monthly payments and a fixed interest rate.
A home equity line of credit (HELOC) works similarly to a credit card – allowing you to borrow as needed during a set draw period, then repay with interest.
Yes. Options like a home equity loan or HELOC let you tap into your equity without having to refinance your existing mortgage.