Understanding Home Equity
Your home’s equity can be calculated by subtracting the money that you still owe on your mortgage form your home’s current value. Your equity is how much of your home you owe according to the payments you’ve made and the appreciation of your home. Although your equity cannot be sold, a bank will still allow you to borrow against it. This is called home equity loan, which can save a homeowner significant amounts on their taxes. Home equity can also be used to consolidate your debt or make big purchases, such as to fix a roof or other major home repairs.