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.
