What is Home Equity?
In practical terms, home equity is the appraised value of your home minus any outstanding mortgage and loan balances. In most cases, home equity builds over time as you pay down mortgage balances or add value to your home. Home equity is an important asset for homeowners since it can be used to borrow home equity loans or lines of credit.
Building home equity is a bit like investing in a long-term instrument, like bonds. Your money is, for the most part, locked up and not spendable.
There are some ways to tap it, but wealth is created over years as your share of “free and clear” ownership of the house increases.
It seems simple enough, but home equity is not guaranteed. Just ask any homeowner who went through the last housing bust. That’s when home equity fell sharply for many homeowners — and, in some cases, completely disappeared.
Contact our specialist team today for further guidance on home equity.