Home Equity
Definition
Home equity is the share of your home you own outright: its current market value minus everything still owed against it. It grows as the mortgage balance falls and as the property gains value.
A home worth $400,000 with $250,000 left on the mortgage carries $150,000 of equity.
Equity is not cash until it is borrowed against or the property is sold. Products that release it, such as a home equity line of credit or a cash-out refinance, turn part of it into borrowing secured on the home.
Lenders rarely allow borrowing against all of it. Most cap combined borrowing at a percentage of the property's value.