How to measure financial success

Measurement 6.

Home equity

Home equity is a major source of wealth, and it's simple to calculate.

Just take the current market value of your home and subtract the outstanding balance on all mortgages.

Let's say your home is worth $200,000, and you owe $120,000 on it. You have $80,000 in equity, or about 40% of the total.

There are no mortgages on about one-third of all homes, so their owners hold 100% of the equity in those properties.

CoreLogic, a California-based research firm, estimates that homeowners hold about 39.2% of the equity in those properties that are mortgaged.

In the wake of the financial crisis and recession, almost 1 in 3 homeowners with mortgages were underwater during late 2011 and 2012 – which meant they owed more than their homes were currently worth.

In economic terms, they had negative equity in their property.

But a rebound in home values has reduced that to only 17%, according to the most recent estimate by Zillow, the real estate assessment website.