====== Equity ======

**Equity** is the owner’s **financial interest** in real property.
It is the difference between the property’s **current value (or sales price)** and the **total debts (liens) secured by the property**.

===== Core Formula =====
  * **Equity = Market Value (or Sales Price) − Total Liens (loan balance + other liens)**

===== What You Need for Exam Calculations =====
  * **Purchase price** and **down payment %** (to find the loan amount)
  * **Loan balance at the time you’re asked about**
    * If **no payments have been made**, the **loan balance = original loan amount**
    * If payments have been made, you’d need either:
      * an **amortization schedule**, or
      * info that lets you compute the **remaining principal**
  * **Sales price** (or current market value)

===== Quick Helpers =====
  * **Down payment = Purchase Price × Down Payment %**
  * **Loan amount = Purchase Price − Down payment**
  * **Equity at sale (simple) = Sales Price − Loan Balance**

===== Example (like your problem) =====
Mr. Johnson purchased a property for $125,000 with 12% cash down. He sold for $139,750 **before making any payments**.

  * Down payment = $125,000 × 0.12 = $15,000
  * Loan amount = $125,000 − $15,000 = $110,000
  * Since no payments were made: **loan balance = $110,000**
  * Equity at sale = $139,750 − $110,000 = **$29,750**

(Alternate check: equity = down payment + profit = $15,000 + ($139,750 − $125,000) = $15,000 + $14,750 = **$29,750**)

===== Exam Tip =====
  * Interest rate and payment amount often appear in the question, but if it says **no payments were made**, you usually **don’t need [[amortization]]**—the balance hasn’t changed.