Equity in a property is defined as what?

Equity in a property represents the portion of the property that the homeowner truly owns outright, meaning it is the difference between what the property is worth and the total amount owed on any mortgages or liens. Therefore, calculating equity involves taking the current market value of the home and subtracting any debts secured by the property, such as mortgages or other liens. This gives a clear picture of the actual value that belongs to the homeowner.

In the context of this question, the correct answer reflects this definition accurately by stating that equity is the value of the house minus all liens and encumbrances. This understanding helps homeowners recognize their financial stake in the property and is vital when considering selling, refinancing, or leveraging that equity for other financial opportunities.