Equity refers to the difference between the current market value of a property and the outstanding mortgage balance or other debts secured against it. In simpler terms, it is the portion of a property’s value that the owner truly owns, free of any liens or encumbrances.
Synonyms
Home equity, owner’s equity, net value
Usage Example
Over time, as a homeowner makes mortgage payments and the property value increases, their equity in the property grows, which can be used to secure loans or as a source of funds for future investments.
Related Terms
- Mortgage
- Lien
- Loan-to-Value Ratio (LTV)
- Refinancing
- Home Equity Loan
- Home Equity Line of Credit (HELOC)
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