DayCents

Home Equity

Home equity is the portion of your home you actually own — its current market value minus what you still owe on the mortgage. It grows two ways: as you pay down the loan's principal and as the home appreciates in value, making it a cornerstone of most households' net worth.

You can borrow against equity with a home equity loan or HELOC, and you realize it as cash when you sell (after selling costs). Early in a mortgage, equity builds slowly because most of each payment goes to interest — the amortization schedule shows exactly how the split shifts over time.