Home equity is the difference between a home's market value and the mortgage balance owed, representing the portion owned outright. It grows through mortgage payments and property appreciation. Homeowners can borrow against equity via home equity loans, lines of credit, or cash-out refinancing, often at lower interest rates. Equity can be used to eliminate PMI, consolidate debt, or fund expenses. Building equity involves making a large down payment, paying down principal, and home improvements.