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Home Equity


Home Equity

Home equity is the financial value of a home, minus the amount that is owed for the mortgage. If the mortgage is entirely paid off, then the homeowner's home equity equals the entire market value of the home. If money is still owed on the mortgage, home equity is equal to the market value of the home minus the amount the homeowner still owes on their mortgage.

About Home Equity

Many banks will extend loans to customers based on the value of their home equity. These are known as Home Equity Loans, abbreviated as HELOC. During the housing bubble leading up to the great recession of 2008, home equity loans were a common way for homeowners to get extra cash. Many of these people were financially overextended when the value of their homes dropped precipitously.

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