Equity

Equity is simply the value of a property minus the remaining mortgage balance. Equity is gained or lost by the appreciation or depreciation in the market value of the property.

For example, if you paid $200,000 for a home and it’s risen in value to $250,000, and your mortgage is $150,000, your equity is $100,000.

It is also typically gained as payments toward principal are made on the mortgage loan. You can increase the equity in your home, and shave off tens of thousands in interest payments, by making one extra mortgage payment a year in a lump sum, or a little each month.

Posted in Refinance Glossary.