Home equity is the portion of your home’s value that you truly own — the difference between what your home is worth and what you still owe on your mortgage. You build equity over time by making a down payment and paying down your loan principal.

As your home’s market value grows, your equity can increase even faster. This means you may gain additional financial flexibility, whether you decide to sell or explore other options.

Home equity can also be used as a resource through home equity loans or lines of credit (HELOCs). These options can provide access to funds at lower interest rates than many traditional credit cards, giving you a smart way to finance improvements, consolidate debt, or cover other important expenses.