Home Equity Guide
Everything you need to know about home equity loans and HELOCs to make the right financial decision.
What is Home Equity?
Home equity is the difference between your home's current market value and any outstanding mortgage balance. It's essentially the portion of your home that you truly own.
Home Equity Formula
Home Equity = Home Value - Mortgage Balance
For example: If your home is worth $400,000 and you owe $200,000, you have $200,000 in home equity.
HELOC vs Home Equity Loan
HELOC (Line of Credit)
- Revolving credit line (like a credit card)
- Pay interest only on amount borrowed
- Variable interest rates
- Flexible access to funds
- Draw period (typically 10 years) + repayment period
Home Equity Loan
- Fixed lump sum payment
- Fixed monthly payments
- Fixed interest rates
- Predictable payments
- Fixed term (typically 5-30 years)
Benefits of Home Equity Financing
Lower Interest Rates
Typically lower than credit cards or personal loans
Tax Advantages
Interest may be tax deductible (consult tax advisor)
Large Loan Amounts
Borrow significant amounts for major projects
Build Credit
Responsible use can improve your credit score
Common Uses for Home Equity
Home Improvements
Kitchen remodels, bathroom updates, roofing
Debt Consolidation
Pay off high-interest credit card debt
Investment Opportunities
Business expansion, education, investments
Ready to Explore Your Options?
Get personalized home equity quotes and see how much you can borrow.