Describe the term "equity" in real estate.

Equity in real estate refers specifically to the difference between the market value of a property and the outstanding debt against it, such as mortgages and other liens. It represents the homeowner's ownership stake in the property. For instance, if a property has a current market value of $300,000 and the owner has $200,000 in mortgage debt, the equity in that property would be $100,000.

Understanding equity is important for homeowners and investors, as it impacts their wealth and can influence borrowing capacity and decisions related to selling or refinancing. This concept is foundational in real estate finance, as building equity is often one of the primary goals for property owners, allowing them to leverage their investment for further financial opportunities or security.