A: According to The Balance, “Home equity is an asset that comes from a homeowner’s interest in a home. To calculate equity, subtract any outstanding loan balances from the property’s market value.”
Home equity is the portion of your home that you truly own and having more equity is a good thing. The more you put into your house, including payments towards your mortgage and fixing up the home, the more equity you have. Fixing up your home and having a greater equity is going to be a great return on investment when you sell your home in the future.
Equity is an asset, which means that it is a part of your total net worth, and there are many ways that you can put that asset to work. You’re able to use this asset towards buying your next home, to borrow from this chunk of change using a home equity loan, or you can fund retirement with a reverse mortgage that gets paid when you leave your house.
