Home Equity

Home Equity is the portion of a home’s value that the owner actually owns outright, calculated by subtracting any outstanding mortgage balance from the current market value of the property. For example, if a home is valued at $300,000 and the mortgage balance is $200,000, the home Equity would be $100,000.

In cases where homeowners seek to leverage their home Equity, they might take out a home Equity loan or a home Equity line of Credit (HELOC). For instance, if the same homeowner decides to renovate their kitchen and takes a home Equity loan of $50,000, their new Equity would be $50,000 (assuming the home’s value remains the same). If the market value increases to $350,000 and the mortgage remains at $200,000, their home Equity would then be $150,000.