What does “Equity” or “owner’s equity” mean?
Owner’s equity refers to the difference between what the home would sell for as compared to what is owed on the property. So if a homeowner owes $50,000 in mortgage debt on the home, and the home is valued at $80,000, the owner’s equity would be $30,000. If the homeowner were to sell their home today, they would be able to collect a check for approximately $30,000.
If the house was worth $30,000, with $50,000 being owed, the owner’s equity would be -$20,000. If the owner’s equity is negative, the homeowner might need to write a check to sell their home, or sell it on a short sale, if they qualify.
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