Your house is worth $278 000 and you have a first mortgage of $190 000. You are also using the house to secure a personal loan for $8500. How much of a home equity line of credit can you apply for?

Question

Quizplus · Accepted Answer

To determine how much of a home equity line of credit can be applied for, we need to calculate the equity in the home. The equity is the difference between the value of the home and the amount owing on the first mortgage, which is $278,000 - $190,000 = $88,000. We then subtract the amount of the personal loan from this equity amount, which is $88,000 - $8,500 = $79,500. The home equity line of credit can generally be up to 80% of the equity, which is $79,500 x 0.80 = $63,600. Therefore, the best choice is D, which is the closest to this calculated amount.

Your House Is Worth $278 000 and You Have a First