What is Home Equity?

Home Equity is the difference between the home's fair market value (what the house would sell for) and the unpaid balance of the mortgage and any outstanding debt over the home. Equity increases as the mortgage is paid or as the property enjoys appreciation.

Example:

Your homes' market value is $100,000 and you owe $60,000 on your mortgage.

    $100,000 (fair market value of the home)

-      60,000 (what you owe on the mortgage)
=  $40,000  This is your home equity, the amount that you can borrow against for home repairs or emergencies or the amount you take away when you sell your home minus your realtor/selling costs.

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