Equity grows as you pay down your mortgage and as the home’s value rises. It shrinks if values fall or if you borrow more against the home.
Why it matters
It is often a family’s largest source of wealth, and it is what a HELOC or a cash out refinance lets you borrow against. Lenders always leave part of it untouched as a cushion.
Where you meet it
Whenever you refinance, borrow against the home or sell. An appraisal usually confirms the value it is based on.
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