Understanding home equity is essential for homeowners as it affects net worth and borrowing capacity. Home equity is calculated by subtracting mortgage debt from the home's value. It increases as mortgage payments are made, providing a financial asset that can be used for loans or credit lines. Lenders typically allow borrowing up to 80% of the home's value. Options for accessing equity include mortgages, Home Equity Lines of Credit (HELOC), and Home Equity Loans (HELOAN). Borrowing should be approached cautiously, considering financial needs and risks.
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