Even though it is a little late in the explanation, I wanted to make sure everyone understood what equity is. Equity is a term used often when it comes planning a second mortgage and it is important to understand the meaning of it. Equity is how much your house is worth or valued at, subtracted by present loan balances. If you have decided to leave your current house and sell it, and costs that came from selling the house would be included. This number is what loan officers usually play with in deciding how much money they are willing to loan to you for a second mortgage. Rarely will you be able to take the maximum amount. When it comes to refinancing, knowing all options and definitions of key terms can help you get the correct quote and loan you are looking for.