home-equity

Vocabulary Word

Definition

'Home equity' is basically the portion of your house that you actually own. It's the difference between your home's current value and the remaining amount you owe on your mortgage. Home equity tends to increase over time as you make mortgage payments and if the value of your home goes up.

Examples in Different Contexts

In wealth management, 'home equity' represents a significant part of an individual's net worth that can be leveraged for financial planning. A wealth manager might advise, 'Carefully managing your home equity can provide financial flexibility and opportunities for investment or securing loans.'

Practice Scenarios

Sustainability

Scenario:

Investing in sustainable home improvements not only supports environmental health but can also enhance property values. It's all about choosing the right improvements!

Response:

I've been wanting to install solar panels. I guess aside from the sustainability aspect, it could also enhance my home equity.

Law

Scenario:

In divorce settlements or estate planning, property assets play a significant role. Make sure to have a clear understanding of your home's current value and outstanding mortgage.

Response:

I was not aware that home equity had such a direct impact on asset division. I would need to review my properties and outstanding loans before proceeding.