What is Equity?
- professor566
- Jul 17, 2024
- 1 min read
Equity refers to the ownership interest someone has in an asset, considering any outstanding debts or liabilities. Here's how it works:
Asset vs. Liability: An asset is something you own that has value, like a house. A liability is money you owe, like a mortgage or loan.
Equity Calculation: Equity is calculated by subtracting the total liabilities from the total value of the asset.
For example, imagine you own a house worth $500,000 and you still owe $300,000 on your mortgage. Your equity in the house would be $500,000 (value of the house) - $300,000 (mortgage owed) = $200,000.
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We use the phrase equity when dealing in real estate. whereas, after subtracting liabilities, owners represent the remaining amount.
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My friend is a real estate agent, he's happy to get this site,, there he can come to know all types of real estate term like he came to know about equity.
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Equity means "fairness and justice", but in property case it means to ownership interest. I explored about it to read this post.
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In property dealing, we use used term equity. In which owners represent the residual after deducting liabilities.
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