Home equity is one of the primary financial benefits of owning a home. It represents your ownership stake in your property and is accumulated over time through your mortgage payments and home value appreciation. However, most consumers don’t understand what their equity is or how to access it. This article answers some of the most common questions.

How do I calculate my home’s equity?

To figure out your home’s equity, you can use online tools such as a home valuation calculator to estimate your home’s current value or get a professional appraisal. Once you know your home’s value, subtract your current mortgage balance to find the amount of your home equity.

Most lenders don’t allow you to tap into your equity until you have built up a minimum of 20% to reduce the lender’s risk. To qualify for a home equity loan, you also generally must have good credit scores and have paid down a significant portion of your principal.

A home equity loan may be used to pay for a variety of expenses, from home repairs or renovations to paying down higher-rate debt. Home equity loans typically have lower interest rates than credit cards and personal loans. They can also be tax-deductible if they are used for home improvement purposes or to pay down high-interest debt. If you decide to take out a home equity loan, make sure you consider how long you plan to keep your home and weigh the pros and cons of this type of financing.