What is 'Home Equity'

Home equity is the value of ownership built up in a home or property that represents the current market value of the house less any remaining mortgage payments. This value is built up over time as the property owner pays off the mortgage and the market value of the property appreciates.

BREAKING DOWN 'Home Equity'

Home equity represents one of the largest sources of net worth for most investors. Home equity can be borrowed against through a home equity loan or home equity line of credit (HELOC).

RELATED TERMS
  1. Mortgage Equity Withdrawal - MEW

    The removal of equity from the value of a home through the use ...
  2. Home Debtor

    An individual who holds a large mortgage with little or no equity ...
  3. Home Mortgage

    A home mortgage is a loan given by a bank, mortgage company or ...
  4. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against ...
  5. Equity

    Equity is the value of an asset less the value of all liabilities ...
  6. Mortgage

    A debt instrument, secured by the collateral of specified real ...
Related Articles
  1. Retirement

    5 Top Alternatives to a Reverse Mortgage

    If you have substantial home equity and don't want to do a reverse mortgage to tap it for retirement expenses, cost out these viable alternatives.
  2. Personal Finance

    Make A Risk-Based Mortgage Decision

    Find out how to choose which mortgage style is right for you.
  3. Retirement

    Reverse Mortgage Or Home-Equity Loan?

    If you have equity in your home and need more cash in retirement, a reverse mortgage – or home-equity loan or line of credit – is an obvious option.
  4. Investing

    10 Tips for Getting a Fair Price on a Home

    When the housing market booms, it's tougher than ever to get a good price. Make sure the house you choose is worth the price you pay.
  5. Personal Finance

    What Is A Mortgage?

    A mortgage is a loan used to purchase a home, where the property serves as the borrower's collateral.
  6. Financial Advisor

    How Reverse Mortgages Work

    Looking into a reverse mortgage may be a good option for accessing the equity in your home if you are retired.
  7. Investing

    When Should You Consider Taking out a HELOC?

    Home equity lines of credit, or HELOCs, have gotten a bum rap since the housing meltdown. But used correctly, they can be a cheap way to access capital.
  8. Retirement

    Why Home Equity Can Be an Income Source in Retirement

    If you are a homeowner facing a retirement savings shortfall tapping your home equity could be an option.
  9. Personal Finance

    The Benefits of a Mortgage in Low Rate Environment

    The idea of simply paying off the mortgage has become an antiquated way of thinking due to the current low interest rate environment.
Hot Definitions
  1. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  2. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  3. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
  4. Long Run

    A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all ...
  5. Quasi Contract

    A legal agreement created by the courts between two parties who did not have a previous obligation to each other. A normal ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center