Final answer:
The term that refers to the difference between the property's market value and what is still owed on the mortgage is 'home equity'. Fred's home equity would be $20,000 if his house is worth $200,000 and he owes $180,000, while Freda's would be $250,000 if her house is worth that much and she has no mortgage debt.
Step-by-step explanation:
The term used to refer to the difference between the current market value of a property and the amount the owner still owes on the mortgage is home equity.
For example, if the value of the house is $200,000 and the owner, let's say Fred, owes $180,000 on the mortgage, then Fred's home equity is $20,000. This is because equity is calculated as the market value of the house ($200,000) minus what is still owed to the bank ($180,000).
In another scenario, if Freda's house is valued at $250,000 and she owes nothing to the bank, her equity would be the entire value of the house, which is $250,000. Likewise, if Frank's house is valued at $160,000 and he owes $60,000 to the bank, his home equity would be $100,000.
Home equity is often the largest financial asset for many households, with the total value of all home equity held by U.S. households amounting to substantial figures, for instance, $23.6 trillion as of mid-2021 according to Federal Reserve data.