The difference between a home's market value and the mortgage balance is known as what?

The difference between a home's market value and the mortgage balance is known as equity. Equity represents the portion of the home that the owner truly "owns" free and clear of any debt. It is calculated by taking the current market value of the home and subtracting the outstanding mortgage balance. For example, if a house is worth $300,000 and there is still a mortgage balance of $200,000, the equity in the home is $100,000.

Equity is important for homeowners because it can indicate the wealth they have accumulated in their property over time. It can also be used as collateral for loans or lines of credit. As homeowners pay down their mortgage or as the value of the property increases, their equity typically grows, providing them with greater financial flexibility.

In contrast, other terms like capital refer more generally to financial assets or resources, net worth encompasses all of an individual's assets minus liabilities, and an asset is simply something of value owned by an individual or entity. Equity specifically pertains to the ownership stake in property after accounting for liabilities associated with it, making it the most accurate choice for this question.