how does heloc affect your equity? I know it doesn't affect your mortgage.

[Amity Word]

how does heloc affect your equity? Does it Reduce your equity?

I know it doesn't affect your mortgage payment already. But does it reduce your equity? 

[Michael Dumler]

@Amity Word, I think the term equity needs to be clarified/defined. Equity is as simple as the amount of the property you own right now. HELOC stands for Home Equity Line of Credit. As the name implies, you're borrowing against the equity in your property; therefore, yes, your equity is reduced.

[Bill B.]

A simple explanation of the above information.   

Your equity equals how much “cash” you would have left after paying all debt on the property, whether it a 1st or 2nd mortgage, a lien or a heloc doesn’t matter.  

$600k property minus $300k primary mortgage, minus $100k Heloc means your equity is $600k minus $400k or $200k. If this is for an idea of your net worth, I’d also subtract reasonable selling costs. If it’s going to cost you $40k to sell, your equity is really only $200k minus $40k or $160k. 

IE: if you put down 3% on a $400k home ($12k). The simple math says you have $12k in equity. But you don’t. You can’t refinance it out, you can’t borrow against it, and you can’t sell to get it. You actually have negative equity, or a liability.