Definition
Ownership value. In a home, it is the market value minus the mortgage balance; in investing, equities are stocks, meaning ownership stakes in companies.
Why it matters
Home equity is many households' largest asset and their most illiquid one. Knowing the number matters for refinancing, PMI removal, and honest net worth; forgetting its illiquidity leads to house-rich, cash-poor stress.
Example
A home worth $450,000 with a $300,000 mortgage balance holds $150,000 of equity. If prices rise 10%, equity jumps to $195,000 even though the loan barely moved.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.