Home equity refers to the portion of a home that a homeowner actually owns, which is the difference between the homes current market value and the amount owed on any liens attached to the property. It is the value of a homeowners financial interest in their home. Home equity can be a powerful financial tool that homeowners can use to pay off debt, renovate their home, or make other financially savvy decisions. Home equity can be built in two ways: by paying down the mortgage over time and through the homes appreciation. Once a homeowner has enough equity built up, they can access it by taking out a home equity loan, home equity line of credit (HELOC), or by using a cash-out refinance. However, because home equity loans and HELOCs are secured against a borrowers home, failure to repay the loan or meet loan requirements may result in foreclosure. Therefore, lenders generally require that the borrower maintain a certain level of equity in the home as a condition of providing a home equity line, usually a minimum of 15-20% .