Equity
Equity is the difference between your home’s market value and the remaining mortgage balance. Equity increases when you make principal payments, when the property value rises, or both.
Homeowners can sometimes access equity through refinancing, a home equity line of credit, or a second mortgage. How much equity is accessible depends on lender rules and the property’s appraised value.
Why this matters:
Equity can be a financial tool, but borrowing against it increases debt and interest costs. Understanding equity helps homeowners make smarter decisions about renovations, investments, and refinancing.
Related Mortgage Terms
Often confused with:
Down Payment — Down payment is your upfront contribution; equity is ownership value over time.
Closely related:
Amortization — Paying principal builds equity.
Refinancing — Equity can enable refinancing or additional borrowing.
Next step:
Refinancing — See how equity turns into real borrowing options (and costs).