Home Equity

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. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against ...
  4. Home-Equity Loan

    A consumer loan secured by a second mortgage, allowing home owners ...
  5. Home Mortgage

    A loan given by a bank, mortgage company or other financial institution ...
  6. Home Equity Conversion Mortgage ...

    A type of Federal Housing Administration (FHA) insured reverse ...
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RELATED FAQS
  1. How do I calculate how much home equity I have?

    Find out how to calculate the home equity in your home, your home equity percentage and the loan-to-value, or LTV, based ... Read Answer >>
  2. How does the loan-to-value ratio affect my mortgage payments?

    Understand what the loan to value ratio is, how the ratio is calculated and learn how it has an impact on your mortgage payments ... Read Answer >>
  3. How many years after the sale of a home must pass before you are considered to be ...

  4. What are some examples of a good time to take out a home equity line of credit (HELOC)?

    Determine if a home equity line of credit (HELOC) is right for you by looking into the most common and ideal uses of these ... Read Answer >>
  5. What are the requirements to apply for a reverse mortgage loan?

    For homeowners of a certain age who wish to stay in their homes but are finding it costly, a reverse mortgage could be the ... Read Answer >>
  6. Is it a good idea to add a reverse mortgage to your retirement strategy?

    A reverse mortgage can be a great way to increase retirement income. Does it work for everyone? What happens after a homeowner ... Read Answer >>
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