Real Estate Equity

[Evan Cruz]

Hi,

Is interest on a loan for a piece of real estate considered an amount owed on the mortgage of a property when calculating the equity for a piece of real estate?

From what I understand, equity on a property is the amount of money a property is worth minus the amount of money owed on the mortgage on the property.

At least one article has said that the principal remaining on the mortgage is the only component of the mortgage that is accounted for when determining the amount of money owed on the property’s mortgage when calculating the equity one has on a property.

I am not sold on just factoring a mortgage’s principal into the amount owed on a mortgage because if interest is also owed on the mortgage for the property, the interest should be accounted for in determining the amount of money owed on a mortgage, correct?