Homeownership is not only an opportunity to own, but an opportunity to invest and acquire a sort of interest called equity. As you pay your monthly mortgage fees you slowly build your home equity.

Equity is the amount you have paid for your home, or the amount of your home you actually own. If your home cost you $100,000 and you still owe $70,000, you have $30,000 equity. This means that $30,000 is completely yours, and can be used as money in case you ever need to use it for unexpected funds.

Don’t jump on it too fast, though. Equity is also your lender’s insurance in case you are unable to pay off your loan. If you do not pay off the loan and you have no equity, your home can be taken from you and you will go into debt.

The equity you acquire increases over time because in the initial payments you are mostly paying back your lender interest. Your interest does not give you equity, because it is money you are paying your lender, not money you are paying for your home. As you pay more monthly fees, eventually you will be paying more in principal, or the actual reimbursement or cost of the home. This is what translates into equity and will become an investment all yours.

Another way to build equity is through appreciation. This is when the market increases the value of your home from the original value (the cost you paid for it when you moved in). The higher your value is, the more equity for which you will be credited.

Some people borrow equity to pay for other loans or large purchases such as home improvements, a new car or college tuition. This may be a good way to go since you will receive tax deductions by using this money instead of using money such as credit that you will have to report on your taxes. Tax advisors can inform you more about these deductions and how to note them on your tax forms.

Usually you manage equity by having an equity loan or an equity line of credit. A loan lets you take out a certain amount, but you take it all at once in cash. You borrow against your equity but are receiving additional money as a loan.

A line of credit is like a credit card, you take out the amount you want when you want. You still have a set limit but you only pay interest on what you take out, instead of paying interest for the whole amount you take out when entering into a loan.

Wells Fargo Home Mortgage offers a unique program called the Home Asset Management Account, which lets you access your equity like a liquid asset. This combines your first mortgage with a home equity line of credit to increase the total amount you have been loaned.

As your equity grows or the value of your home rises, the more available equity you have to withdraw at anytime you choose. You do not have to apply for a separate loan each time you need money, you simply take out credit as you need it.