Term Tuesday: Equity

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Equity is the value of a piece of property less the debt(s) against it.
For example: the current market value of a home is $250,000. The owner originally took out a loan for $225,000 and has paid off $12,000 of that mortgage. The owner has $17,000 equity.

Equity, however, is not a liquid commodity. To realize the value of a home's equity, the owner would secure a second, or junior mortgage.