Equity is the difference between how much your house is worth and how much you owe on it. For example, if you bought a house for $100,000 and sold it for $150,000 (after having paid the down payment), then you'd have $50,000 in equity. If you refinanced or took out an equity loan, you'd now owe that money back if you sold the house for $100,000. When refinancing your mortgage, most lenders will require any equity to be paid in cash upfront. If you have little or no equity in your home, it might not make sense to refinance at all.