Equity represents ownership value. In real estate, home equity = home market value - remaining mortgage balance. In business, shareholder equity = total assets - total liabilities.
Home Equity Example
Your home is worth $400,000 and you owe $250,000 on the mortgage. Your equity is $150,000. You build equity by paying down the mortgage and through property appreciation.
Why Equity Matters
Home equity can be tapped through HELOCs or home equity loans. Business equity represents what shareholders would receive if all debts were paid.