In real estate, what does 'equity' generally refer to?

In real estate, 'equity' refers to the difference between the property's market value and the amount owed on any mortgages or liens against that property. This means that if you own a property valued at $300,000 and you owe $200,000 on your mortgage, your equity in the property would be $100,000.

Equity represents the owner's true stake in the property and can be considered a form of wealth that can be accessed through borrowing against it or upon selling the property. This concept is crucial for property owners as it influences financial decisions such as refinancing, home equity loans, or selling the property.

Understanding equity is essential for investors and homeowners alike, as it provides insight into the value of one's investment in real estate, enabling informed decisions regarding buying, selling, or financing property.