Definition
The difference between your home's current market value and the remaining mortgage balance. Equity builds as you make payments and as the home appreciates in value. Homeowners can access equity through home equity loans, HELOCs, or cash-out refinancing. Negative equity (being "underwater") occurs when the mortgage balance exceeds the home's value.
Related Mortgage Terms
- Home Equity Loan
A second mortgage that allows homeowners to borrow against their equity in a lum...
- Loan-to-Value Ratio (LTV)
The ratio of the mortgage amount to the appraised property value, expressed as a...
- Refinance
The process of replacing an existing mortgage with a new one, typically to secur...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.