Equity

Equity represents the ownership value in an asset or company. In personal finance, home equity is the difference between your property's market value and the remaining mortgage balance. In business, equity is the value of a company after all debts are subtracted from total assets.

For homeowners, equity builds over time through mortgage payments and property appreciation. A home worth $400,000 with a $250,000 mortgage has $150,000 in equity. Home equity can be accessed through home equity loans, HELOCs, or cash-out refinancing.

In the stock market, equity refers to ownership shares in a company. Shareholders' equity on a balance sheet represents the book value available to investors after all obligations are met. Private equity and venture capital firms invest in companies' equity with the expectation of significant returns through growth and eventual sale or IPO.