Equity
The owner's value in a property, equal to its current market value minus the debt owed against it.
Equity is the portion of a property's value the owner actually holds, found by subtracting the outstanding loan balance and other liens from the current market value. Equity grows as the loan is paid down and as the property appreciates.
Equity is not the same as profit. Profit also accounts for the costs of buying and selling.
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Investments and Business Brokerage (2% of the exam)
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- Mortgage
The security instrument that pledges real property as collateral for a debt, creating a lien in favor of the lender.
- Loan-to-Value Ratio (LTV)
The ratio of the loan amount to the property value, used to size a loan and to decide whether PMI applies.
- Amortization
The gradual repayment of a loan through regular payments that cover both interest and principal until the balance reaches zero.
This definition is Florida real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.