Understanding Home Equity

The impact of home equity on your mortgage loan.

You hear the phrase “home equity” used a lot when discussing your mortgage loan options, but what is it, exactly? Consider equity an equation describing the value of your home and the claims against it.

Changes to either of these variables can impact the amount of equity you have in your home.

As the appraised, fair market value of your home increases, so does your equity. If the appraised value of your home decreases, the amount of equity also decreases. If you pay down the principal balance of loans on your home, your equity increases. As you borrow more against your home, your equity may decrease, depending on the market value.

You don’t have to remember any equations to understand equity. To put it simply, your home can gain equity in the following ways:

  • Cash used for down payment
  • Extra payments made toward principal balance
  • Appreciation of your home’s fair market value

What can your home equity be used for?

You can pull the equity that you have earned in your home and use it for any purpose that you need. You may find that your equity is the perfect tool to pay off high interest debt, loans, or overdue bills. Your equity may be used to repair and remodel your current home, or used as a down payment on a vacation or investment property. Your equity may be the lifeline to protect you during periods of hardship or unemployment, or the ticket to the vacation or retirement that you have been waiting for. The equity in your home belongs to you, and you can do with it whatever you choose.

How do you get your home equity?

If you want to access the equity in your home, contact one of our American Pacific Mortgage expert loan advisors to discuss how your equity can be put to work for you. One of the things your advisor will present to you are the various options in which you can get your equity.

  • A Cash-out Refinance
  • A Home Equity Line of Credit (HELOC)
  • A Home Equity Loan
  • "Jeremy helped me and my husband refinance our home. I strongly recommend him with any and all of your finance inquiries. My husband and I had a great experience refinancing our home."
    Carmen G., Home Owner
  • "Jeremy was really great to work with! He was very responsive to all of my requests and made the entire loan process very easy to understand. I highly recommend Jeremy to anyone looking to buy or refinance."
    Melanie J., Homeowner
  • "Jeremy at American Pacific Mortgage went above and beyond to help my wife and I navigate the mortgage process when buying our new home. Your service was invaluable and we hope to work with you again if we ever purchase another home."
    Cacilie W., Home Owner

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