In real estate, Equity is the value of an owner’s financial interest in a property, calculated as the property’s current market value minus the total of all outstanding loan balances secured by the property. It represents the portion of the property that the owner truly owns free and clear of debt.
Equity can increase through appreciation, loan principal repayment, or property improvements, and it can decrease if property values fall or additional debt is taken on. Equity is an important factor in refinancing, selling, or borrowing against a property, as it affects both the owner’s net worth and available financing options.
