Question

what is home equity?
home equity is the amount of interest paid on a mortgage during the lifetime of the loan.
home equity and principal are two types of mortgages that someone might select when refinancing a home.
home equity creates a line of credit that can then be deducted on federal tax returns.
home equity is the difference between the market value of a house and the amount owed on the mortgage.

Explanation:

To determine the correct definition of home equity, we analyze each option:

• The first option describes mortgage interest, not home equity.
• The second option incorrectly classifies home equity as a type of mortgage (it's not; it's the value difference).
• The third option confuses home equity line of credit (HELOC) with home equity itself; home equity is the value, not the credit line or tax deduction.
• The fourth option correctly defines home equity as the difference between a home’s market value and the remaining mortgage balance.

Answer:

D. Home equity is the difference between the market value of a house and the amount owed on the mortgage.