What Is the Quantifiable Value of Home Equity?
You home is possibly the biggest investment you will make in life and over time you slowly build up equity. Equity is the amount of the home you actually own.
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Definition
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The definition of home equity is the value of your home minus the amount of your mortgage. This number is the quantifiable amount of your home equity. When you first purchase your home, you have little if any equity. As you pay off your mortgage, you own more of your home.
Benefits
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The benefit of home equity is that you can use it to borrow more money with a home equity loan or home equity line of credit. These are loans that must be paid back, but they can be used for home improvements, purchasing a car or any other reason.
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Warning
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Home equity is an excellent tool, but it can backfire on you. If you miss payments and default, your home can be foreclosed on by the bank. Also, missed payments can negatively effect your credit score.
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References
- Photo Credit home sweeet home image by .shock from Fotolia.com
