Sorry i am naive and dumb, i have a friend who told me, quot; you make money out of buying a home, because of the? -

because of the equity, i guess you earn in equity. quot; can someone help me better understand this.?|::::|After you ve made half of your total house payments, and you ve paid in say, $90,000, that s money that the bank says you can borrow against and use for home improvements, vacations, paying credit card bills, etc. Although if you do those things, you still have to pay back that money, so you only really quot;makequot; money off your equity if you never, ever touch it.|::::|You will only quot;makequot; money if you sell the home, also known as a profit, for more than the balance owed. You can borrow against the home while you own it, provided you have accrued equity (which other answers have defined) or if you bought the home below value. But that s not really quot;makingquot; money, that s being able to use your equity acquired by paying your mortgage down, to get more money....which you will have to pay back to the mortgage holder. |::::|Homes should increase in value, some more than others. It also depends on the upgrades you put into your home. Our last home increased over $400,000 over what we paid for it within 5 years. We were able to draw against that equity to take loans against the home to do more with the home. And when we sold it even in the down market we sold it for well over $400,000 above what we purchased it for. A home is an investment when you keep it up and continue to upgrade it. It is not if you just let it go and do nothing. There is a difference. |::::|Equity is the amount of $ you have earned by paying the mortgage each month on your home. Each month make a payment and the bank takes out the interest, principal and taxes. Your principal decreases each month. So, for example- let s say the loan on your home is for $100,000. You have paid off $20,000 so far- and the balance on your loan is $80,000. You have about $20,000 in equity in your home. (or thereabouts). I think this is correct...you asked a good question, and you are not dumb!|::::|Equity is the value created in a home from appreciation, the longer you own your home the more equity you get, for example my first home I paid $35k and 8yrs later sold it for $290k|::::|yes. Do you need help knowing what equity is?