Money Jargon, Equity.

Yesterday I told you I was going to track down the meaning some words that I pretend I know the meaning but don't. The first word is equity. I'm pretty sure if someone came to me and said, "Hey I just got a home equity loan." I would be like "oh, cool dude". But in my head I'd be thinking, "what the poop is that?". Well after a little research, I think I've found the meaning.

The word "equity" comes from the Greek meaning "equios", which is a small wooden axe used to cut vines. Ok, you're right, that was a complete lie. But this is not:

Equity, when referring to home loans, is the difference between what you would owe on a house and how much the house is worth. If you owned a house worth $100,000 and you still owed $80,000 on it, you have $20,000 in equity. Why is that important? It is important because you can take out a loan against the $20,000 of equity you have in the house. By "against", I mean you can use your equity as collateral to borrow money. This is called a "Home Equity Loan". You've probably heard it on TV, and now you know what it means, and I do too.

There are other ways this word is used when it comes to stocks and shareholders. I won't be going over that today, cause my pizza rolls are done, and I'm hungry. But come back later and we will talk about other secret words that we will declassify.

Chris