Home Equity

Home equity is your home's market value minus what you still owe on it — the part of the house that is actually yours. It grows two ways: you pay down principal, and the property appreciates. Equity is real wealth but illiquid wealth: converting it to cash means selling, refinancing, or borrowing against it, each with costs. Falling prices can push equity negative, which is called being underwater and blocks both selling and refinancing until values recover.