What is Home Equity and How Does it Work?

What is Home Equity and How Does it Work?

By Claren Walker


The difference between the current market value of your house and the money that you owe on it- home equity.  Home equity is typically a homeowner’s most valuable asset. That asset can be used later in life, so it’s important to understand how it works and how to use it wisely.

There are several ways you may attain equity on a property. Of course, you can raise the value of your home with savvy renovations, but you can also build equity without even trying!  Currently, homes are quickly gaining value in the Denver market because we are lucky enough to have a healthy real estate market! 

We are currently seeing that many homeowners are using equity to buy their next homes- dream homes even!  If you move, you can sell your current home and put that money towards the purchase of your next home!

Once you’ve built up available equity in your home, you may also be able to use a portion to help pay major expenses!  Homeowners are utilizing these funds for home improvement, higher education, or to even fund retirement! 

There are different types of loans available when choosing to use your home as collateral, so you will first need to apply with a licensed lender- just like with any other loan. The lender will evaluate your home’s market value and offer a maximum amount that you can borrow.  It is important to stay connected with real estate professionals who can help you understand how these types of loans may benefit you! 

Let us help connect you to some of the best lenders we know to assist you in properly handling the collateral in your home!  Even if now is not the time to make any changes to your current mortgage, it is ALWAYS great to understand your options! 

Adriana Johnson