What Does the Principle of Horizontal Equity State?
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Key terms
- EquityThe value of ownership in an asset after debts are subtracted. In real estate, it's the property value minus what you owe. In stocks, it represents ownership shares in a company.
- Home EquityThe portion of your home that you truly own, calculated as the property's market value minus what you owe on your mortgage. Builds over time through mortgage payments and property appreciation.
- HELOC (Home Equity Line of Credit)A revolving credit line secured by your home equity. You can borrow, repay, and borrow again up to your credit limit, typically with variable interest rates.
- Equity FinancingA method of raising capital by selling ownership shares (equity) in a company to investors in exchange for funding. Unlike debt financing, equity financing does not require repayment or interest payments, but it does dilute the existing owners' ownership percentage and control. Companies at various stages use equity financing, from startups selling shares to angel investors to established companies issuing stock through public offerings.
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