Justin and Angela have a home valued at $96,000 with an outstanding mortgage of $60,000. If their lender is willing to provide a home equity loan of up to 75% of the market value of the home, how much can they borrow using a home equity loan?
A) $0
B) $12,000
C) $27,000
D) $28,000
E) $36,000

Question

Quizplus · Accepted Answer

First, calculate 75% of the home's value: 0.75 * $96,000 = $72,000. This is the maximum amount the lender is willing to have outstanding on the home, including the existing mortgage. Since they already have a $60,000 mortgage, they can borrow up to $72,000 - $60,000 = $12,000.

Justin and Angela Have a Home Valued at $96,000 with an Outstanding