Your home equity is the difference between what you owe on your mortgage (and on any other home loans) and the market value of your home. You build equity as that difference grows —when you repay mortgage principal to decrease the amount you owe, or when your home’s value increases. You can borrow against that equity when you need cash, using either a home equity loan or a line of credit. Both offer a number of advantages over other types of financing, including:Interest savings. Home equity loans and lines typically have much lower interest rates than other types of financing, such as credit cards and personal loans.
Tax benefits. Just like your first mortgage, the interest you pay on a home equity loan or line is usually tax-deductible. Consult your tax advisor about the deductibility of interest.
