The basics of home equity and what you should know Once you become a homeowner, the concept of building and taking advantage of the equity in your home is something you should consider. But what exactly is equity? Home equity is the difference between the value of your home and what you owe. To find out how much equity you have in your home, subtract how much you still owe in mortgage payments from the total value of your home. For example, if your house is worth $300,000 and you still owe $200,000 in mortgage payments, then you have $100,000 in equity.Building equity can happen in two main ways-when the property value increases or when the amount of your housing debt decreases.Property value can increase when:There are rising housing prices in the marketYou make home improvements that increase the value of your homeYou continue to keep up with repairs in your homeHousing debt decreases when:You continue to make your monthly payments on time. If you get a shorter loan term, then you will build equity faster.You make extra payments. If you need to take out a longer term loan, you can choose to make extra payments when you have the available funds to get rid of debt fasterOnce you have equity built up on your home, you can take out a home equity loan, or a second mortgage. This usually comes in two different forms: home equity line of credit (HELOC) and home equity loans. You can use this money for pretty much anything, but many people use it to pay for home improvements or college tuition. Be aware that when you take out a home equity loan, you need to borrow responsibly. The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its affiliates and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.