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Home Equity: Deinition

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Home equity is the percent of your home total price. It’s the part of the house you really own and the asset which you can use.

Most people need to borrow money to buy a house. They take a mortgage, buy a home and then they are titled “homeowners”. But they are not the only homeowners, as their lenders also posses apart of their house until the total loan is covered.

In numbers you can see the following example. The house price is $300 000 and you make a 10% down payment. Consequently, you really own 10% or you house and it’s $30,000.

It’s an easy way to subtract the money you owe from the total price of the house. Thus, you get your home equity. In case the price of your property grows, your home equity also increases without real change of your loan balance.