<p>Hi,
I was wondering if there is home equity on a property if the loan is a interest only loan… you are only paying for the interest and not the principal… or atleast more interest than principal.
Thanks beforehand,
-Namooangel</p>
<p>There can be home equity. Interest only loans are a financing arrangement. You can still have home equity if the value of your house has risen after you purchased it.</p>
<p>If you buy the home for $250K, take an interest only loan and a year later the house is worth $275K, you have equity of $25K. Your equity did not come from any principal payments applied to your mortgage, but because the FMV of your home increased.</p>