Home Equity

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Equity is the increase of value 

Factors that increase Home equity. 

Inflation

Market Sales

Supply and demand of homes for sale

Upgrades to  the home

Development in the homes areas

Many more factors

Good Equity 

Great Equity

You buy a house today for $700,000

Your payment is $4,000 a month for 10 years.

Over 10 years you payed $480,000 in payments

Your house is now worth $1,000,000

Your balance on  your loan is $600,000

$600,000 balance + 480,000 payments = $1,080.000

But  the house is worth $1,000,000

What happen to the $80.000

Note there are other costs (Taxes Insurance Etc)

That $400,000 in equity is less then what you payed $480,0000

You basically each month buried it in the so called backyard. 

Think about it you payed $480,000.

But you have $400,000 in equity

Think about it you were able to live in a house you own.

$400,000 of the $480,000 you now have as equity.

It cost you 880,000 to live in a house for 10 years or simply it cost $670 a month.

Rent a Home - Pay rent for 10 years  totaling $480.000  you have nothing.It cost you $4,000 a month to rent.

Buy a Home-  Pay a Mortgage for 10 years you have $400,000 in equity it cost you $670 a month to own.

You are living in the same house.

Imaging you buy a car and make payments for 10 years. At the end of 10 years you own a car and have all the money   you payed  and the car is worth  more then you bought it for. That would be a great deal. That is what owning a home is.

Great equity  is better if you buy to rent out a investment property - Instead of you living in the home you rent it. The renter pay you rent and you pay the lender. The rent the renter pays is going in  to the so called  backyard. Others words your pocket it- Great Equity

These are simple examples of Equity. There are  more factors and details involved in the increase of equity.

I can give a lot information in detail to help you understand  your home equity (The Value).  I was a Wall Street Investment Banker for 26 Years.  I know my stuff.