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What is Equity in real estate?

What is real estate equity?

Real estate equity is the ownership interest in a property. Typically, a property is purchased with a mortgage loan at a specified loan-to-value ratio (LTV).

How to calculate real estate equity?

Equity = Market Value - Loan Value

For example, if you own a property that, based on comps or an appraisal is worth $100,000, but you have a $75,000 mortgage loan, then your equity is $25,000.

$25,000 = $100,000 - $75,000