The equity you have in your home is one of the most powerful tools on your personal finance tool belt. Depending on how you opt to use that tool, your home equity can deliver short-term financial relief, as well as provide long-term tax benefits. So, the more you know about home equity, the more successfully you'll be able to maximize its range of capabilities.
But, what is equity, really?
Simply defined, home equity is the current market value of your home, minus the remaining mortgage balance. Think of it as the percentage of literal home ownership that you've built up by making your monthly mortgage payments, plus the appreciation of your property's value over time.
Many homeowners never tap into the power of their home equity, feeling that it's smarter - and more secure - to merely make their mortgage payments, keep up with home maintenance, and watch their equity grow. Like a savings account.
There's nothing wrong with growing home equity, of course.
But, think about it this way: Practicing good financial management is part of being a successful homeowner. The full range of home equity options and potential benefits may surprise you, as you'll see in the following sections. Aren't you curious to learn what those options and benefits might be?