What is equity in real estate?

What is equity in real estate?

• A. The market value of a property only
• B. The outstanding mortgage balance of a property
• C. The difference between the property's market value and the mortgage balance
• D. The purchase price of the property

Answer: (C)

Equity in real estate refers to the difference between the property's market value and the outstanding mortgage balance. This concept is crucial for property owners because it represents the actual value or ownership interest that they have in the property. For example, if a property is valued at $300,000 and the mortgage balance is $200,000, the equity would be $100,000. Equity can increase over time as property values rise or as the mortgage balance decreases through payments. Understanding equity is important for homeowners and investors alike, as it can influence decisions regarding refinancing, selling, or leveraging the property for additional investments.

Equity in real estate refers to the difference between the property's market value and the outstanding mortgage balance. This concept is crucial for property owners because it represents the actual value or ownership interest that they have in the property.

For example, if a property is valued at $300,000 and the mortgage balance is $200,000, the equity would be $100,000. Equity can increase over time as property values rise or as the mortgage balance decreases through payments. Understanding equity is important for homeowners and investors alike, as it can influence decisions regarding refinancing, selling, or leveraging the property for additional investments.