Do you know what is “home equity”? Home equity or sometimes called real property value in economics is calculated by subtracting the unpaid balance of the mortgage and any outstanding debt over the home from the home fair market value. It said to me the homeowner’s unencumbered interest in their property, technically not liquid or has zero rate of return and it increases in value as the mortgage is paid or as the property enjoys appreciation.
Home equity is usually used as a form of collateral to what we called home equity loans and in Home Equity Line of Credits or (HELOC) where interest paid on such loans can be tax deducted in the United States. This kind of loan can be used for any purpose such as for consolidate debt, home improvements or renovations, vacations, or for unexpected expenses and also called "second mortgages" because they are typically obtained after the home has been purchased with a first mortgage loan.
1 comments:
Thanks for the great post. Learned so much from here about Home Equity.
Deirdre G
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