Equity
The portion of your home's value you own outright, calculated as current value minus what you owe on the mortgage.
If your home is worth $400,000 and you owe $260,000 on your mortgage, you have $140,000 in equity. Equity builds two ways: by paying down loan principal over time and by appreciation in the home's market value.
Equity isn't liquid by default, to access it, you either sell the home, refinance and pull cash out, or open a home equity line of credit. Each path has costs and trade-offs in rate, payment structure, and how it interacts with your existing first mortgage.
Many lenders calculate equity using a recent appraised value rather than the original purchase price. In rising markets that can mean substantial equity well before the loan amortization curve would suggest, but it can also evaporate if local values pull back.
Related terms
Other terms you'll see alongside Equity
A refinance that replaces your existing mortgage with a new, larger loan and returns the difference to you as cash.
A revolving credit line secured by your home's equity, with a variable rate and draw period followed by repayment.
The loan amount expressed as a percentage of the property's appraised value or purchase price (whichever is lower).
The portion of your mortgage payment that goes toward reducing the loan balance, separate from interest.
Want to apply Equity to your real numbers?
Get a personalized estimate in under a minute, or talk to a licensed HCMG loan officer about how this affects your specific situation.