Home Equity

You bought the home for $60k down and took a mortgage of $340k. In all, the home cost you 400 large.

But then it went up in value, recently having been given an offer for $500k. And you paid down 100k of your mortgage in the meantime, such that your mortgage stands today at $240k.

When you bought the home, the 60k down was your equity in your home. The rest of the financial vehicle used to buy it was all debt, or OPM, or other people’s money. But now, your home equity stands as being worth 500k minus 240k or 360k.

Huge 500% bump from the 60k in which you started, and yes, welcome to the world of leverage and/or leveraged buyouts. You just did one on your home, and you were "paid" handsomely.

And yes, it goes the other way, too. In that case, we call it shmequity. All right...maybe inequity?