home equity

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Home equity is the value of a homeowner’s interest in their home. In other words, it is the property’s current market value minus any liens that are attached to that property. The equity in the property may change for a variety of causes, including the rise and decrease of the community's total market value. 

For example, if you purchased a house via a mortgage loan and you only paid 20%, then the lending institution has the 80% interest in the house until the loan has paid off, which means the home equity is 20%.

[Last updated in March of 2022 by the Wex Definitions Team]