Equity represents the ownership value an individual holds in an asset after deducting any debts associated with it. In real estate, equity is calculated by subtracting the outstanding mortgage balance from the property’s current market value. As mortgage payments are made or as the asset’s value appreciates, equity increases, making it a valuable financial resource. It reflects a real stake in ownership, which can be tapped into for additional loans, investments, or selling assets to unlock funds, providing both security and flexibility.