Equity
The difference between the market value of a property and
the claims held against it.
The value of a homeowner's unencumbered interest in real estate. Equity is the
difference between the home's fair market value
and the unpaid balance of the mortgage and any outstanding liens. Equity increases as the
mortgage is paid down or as the property appreciates.
Example:
An owner with a house worth $100,000 and an $80,000 mortgage has $20,000 in equity.
