Here’s the difference
The value of your home is based on assessment of your property’s value, based on the location, condition and multiple other factors.
Home equity is the difference between what you owe on your mortgage and what your home is currently worth. For example, if you owe $400,000 on your mortgage loan and your home is worth $450,000, you have $50,000 of equity in your home.
Home equity increases in two ways:
1) As you pay your mortgage down, the amount of equity in your home will rise.
2) Your equity will also increase if the value of your home jumps.
However, this also works inversely. If your home value drops at a rate faster than the rate at which you’re paying your mortgage, you could lose equity. In today’s market home values are on the uptrend. That’s great, right? More equity in the homeowner’s pockets, especially in this seller’s market.
Have some good equity in your home and want to do some renovating? You can refinance your mortgage to get some of that money in your pocket to make that dream kitchen renovation come true.
If you’re serious about building equity in your home, contact me and I’d be glad to share some additional tips or connect you with one of my awesome lender partners to help!