What is home equity?

You may be able to borrow money using your home as security.

Owning a home is an asset because homes generally increase, or appreciate, in value. As the years go by and you pay your mortgage down, your home equity potentially increases.

Equity is the difference between how much your house is worth and how much you still owe for it. This means you may be able to borrow money using your home as collateral.

Some reasons you may want to borrow against your home include investing in consolidating high-interest debts, home renovations and paying for other major expenses.

If you do borrow against your home’s equity, be sure to make your home equity payments on time and in full. Otherwise, you may risk losing your home. Use this ability to borrow responsibly, and you’ll have a whole new level of flexibility to achieve your financial goals.

Click the Next button to compare two ways of using your home as collateral — an asset that allows you to borrow money.