Turning the Value of Your Home into Borrowing Potential

Home value

Find out what it means to have equity on your home, and how you can build it for use down the road.

Click here to refer a client or friend

Click here to see if you qualify for a loan

Today we’re going to be discussing the question, “What is equity in your home?”

What is equity? It’s the difference between what your home is worth, and the amount of money that you owe.


A quick example: Say my house is worth $200,000, but I only owe $100,000. That means my equity is $100,000.

You may also have heard the term “negative equity.” This means that you owe more money on a property than what it’s worth.

Many people want to know how they can build the equity on their home. To do that, there are two methods available:

  1. Appreciation of value. By taking care of the home, maintaining it, and making sure you have good features, you can increase the value of your house. The more value your house has, the more equity you have.
  2. Reduce the amount of debt that you have on your house. Most people don’t know, for example, if you have 30-year mortgage and make just one extra payment per year, you can pay off that mortgage about nine years faster, and that builds up equity a lot more.

Now the question is: “I’ve got equity in my house, so what can I do with it?

There are three things you can do with the equity in your home:

  1. You can sell your house. As you pay off your house, you get that money back when you sell it.
  2. You can use the equity to purchase your next house. A lot of second- or third-time buyers take advantage of this—you can take the equity of the house you’re selling and use it as a large down payment on your next house. This will actually make your next house more affordable because now you won’t have mortgage insurance, your payments are a lot lower, and, in the long run, you can use that money to upgrade your house.
  3. If you’re not ready to buy or sell a house, you can borrow money from your equity to pay off debt. Contact a lender and determine your equity—If your home has $100,000 in equity and you want to borrow $50,000 to pay off any debts, car notes, college expenses, etc., you can put your equity towards those purposes.

Thanks again for watching my blog, and I hope this content was useful to you. If you ever have any questions or concerns, feel free to reach out to me at anytime via text, email, or phone. We look forward to hearing from you!