What is home equity?

If you are not familiar with the term home equity, it is the difference between the value of your home and what you owe on that home. Home equity increases as the property value increases and the amount you owe on your mortgage decreases.

Having home equity gives you an asset that you can use when you need it. If you have a medical emergency or need to cover a large expense at the last minute, you can convert that equity into cash. You may also want to use your home equity for improvements to increase the value of your home, or you may want to include it as part of your retirement strategy.