What's mortgage equity?
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Lets say:
Jan 2000 you buy a house priced at lb50,000 and bring out a mortgage for the full amount.
It is then valued today Feb 2009 at lb100,000.
Your original mortgage won't hold increased so you'll still owe lb50,000 assuming you haven't paid any of it off. (This could be the satchel under an interest only mortgage for example)
In this situation, you hold a house worth lb100,000 but a loan only worth lb50,000 so you would have lb50,000 "equity" contained by your home.
This means that if you sold your property and paid backbone your mortgage you'd still have lb50,000 in your pocket.
Equity is ownership.
In the case of a house, where you hold a mortgage, equity is the percentage of the house that you own.
You can figure out your equity by subtracting the principal you owe to the bank for your mortgage, from the comparable efficacy of your house today.
That is, if you sold your house today, how much could you get for it? Take that number and subtract what you owe to the bank (and subtract another 8% to cover the expense of selling). What's vanished is your equity.
All over the globe, house prices are dropping. So, your equity is dropping every day, too. At some point, you may owe more than the house could be sold for, and that's when your mortgage is "below water."
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