Devon has owned a home for eight years.It was purchased for $289000 .She has a first mortgage of $156 500,a car lease with a buyout amount of $12 000,and credit card debt of $1989.How much of a home equity loan can be applied for if the house was recently appraised at $331000 ?
A)$96 300.
B)$108 300.
C)$139 600.
D)$74 700.

Question

Quizplus · Accepted Answer

First, we need to calculate Devon's total debts:

Total debts = First mortgage + Car lease buyout amount + Credit card debt

Total debts = $156,500 + $12,000 + $1,989

Total debts = $170,489

Next, we can calculate Devon's equity in the home:

Equity = Appraised value - Total debts

Equity = $331,000 - $170,489

Equity = $160,511

Finally, we can calculate the maximum home equity loan amount by multiplying the equity by 60% (which is a common maximum percentage for home equity loans):

Maximum home equity loan amount = Equity x 0.6

Maximum home equity loan amount = $160,511 x 0.6

Maximum home equity loan amount = $96,306

Therefore, the best choice is B) $108,300.

Devon Has Owned a Home for Eight Years