Equity

Definition

Equity is what you own in an asset after subtracting what you still owe on it.

Home equity example

If your home is worth $400,000 and your mortgage balance is $280,000, your equity is $120,000.

How equity grows

• Paying down loan principal
• Asset value appreciation
• Additional owner investment

Why equity matters

Equity contributes to net worth and can improve financial flexibility, especially for homeowners and business owners.