If a borrower purchased a home for$100,000, put $8,000 down and borrowed the rest from a bank, what is the amount of equity the homeowner has in the house if the house falls in value to $90,000?
A) the borrower has an equity in the property worth $8,000.
B) the borrower has zero equity in the home.
C) the borrower has negative equity in the home equivalent to $2,000.
D) None of the above.

Question

Quizplus · Accepted Answer

The borrower initially had $8,000 in equity from the down payment. However, when the home's value decreased to $90,000, the loan amount ($92,000) exceeded the home's value, creating negative equity of $2,000.

If a Borrower Purchased a Home For$100,000, Put $8,000 Down