The portion of an asset you truly own: value minus debt against it.
Equity grows three ways: paying down the loan, the asset appreciating, and improvements that raise value. Home equity can be borrowed against with a HELOC or home equity loan.
Formula: Equity = Market Value − Loan Balance
Example: A $500,000 home with a $300,000 mortgage has $200,000 equity.
FAQ
What is Equity in simple terms?
Equity grows three ways: paying down the loan, the asset appreciating, and improvements that raise value. Home equity can be borrowed against with a HELOC or home equity loan.
How is it calculated?
Equity = Market Value − Loan Balance. Example: A $500,000 home with a $300,000 mortgage has $200,000 equity.