What is the term for equity created by a purchaser performing work on a property?

The term "Sweat Equity" refers to the equity created when a purchaser enhances a property's value through their own labor and efforts, often by performing repairs, renovations, or improvements. This concept recognizes the value added to a property not just through financial investment, but through the time, energy, and skills that the individual contributes to the property.

For example, if a homeowner chooses to remodel their kitchen or landscape their yard themselves rather than hiring a contractor, the work they perform adds intrinsic value to the home. This value becomes part of their equity, allowing them to potentially earn a return on their investment when they decide to sell the property.

The other terms listed describe different types of equity or financial concepts that do not directly relate to the effort exerted by an individual in improving property value via personal labor. Understanding "Sweat Equity" is crucial for mortgage loan officers as it highlights alternative ways for buyers to increase their investment in a property beyond traditional financial contributions.