What is equity" You?ll often hear the term equity when it comes to homeownership, but you may not even know what that means even if you already own a home. The amount of money you receive when you sell your house, minus any debt associated with it, is equity. When looking at it from an investment point of […]
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What is equity"
You?ll often hear the term equity when it comes to homeownership, but you may not even know what that means even if you already own a home. The amount of money you receive when you sell your house, minus any debt associated with it, is equity. When looking at it from an investment point of view, the owner of the asset (probably you in this case) is referred to as a stakeholder. There are two types of equity: book value and market value. Equity calculations occur most often in businesses and homes.  Calculating the difference between an asset and its liabilities determines the equity’s book value. An equity’s market value is based on the valuation of investors, or its current share price if you’re calculating the market value for a business. For a home, fair market value is typically what people in the consumer marketplace are willing to pay for your house.
Understanding home equity
Say you want to determine how much equity you have in your own home. You can take its current value and subtract the a...