What Net Worth Means
Net worth is calculated by subtracting your total liabilities from your total assets. Assets include cash, investments, and property value, while liabilities include debts such as loans and credit card balances. A mortgage is typically listed as a liability because it represents money you owe.
Should You Include Your Mortgage
Yes, most financial professionals include your mortgage in net worth calculations. The outstanding loan balance is a liability, while the home equity is an asset. You do not double count the home by including both the full property value and the full mortgage balance. This approach gives a clearer view of your true financial position.
Why It Matters for Financial Planning
Including your mortgage helps you understand your leverage and overall debt load. It can affect decisions about savings, investments, and retirement planning. For more detail on how assets and liabilities are handled, you can refer to the Consumer Financial Protection Bureau guide on net worth.
