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27 April, 07:56

Acme Home Lending offers home equity loans up to 80% of the home value for its customers. If Sally Johnson has a home valued at $200,000 and a current mortgage of $50,000, how much can she borrow in a home equity loan from Acme?

a) $50,000

b) $80,000

c) $110,000

d) $150,000

e) $160,000

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  1. 27 April, 10:19
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    c) $110,000

    Explanation:

    The computation of the borrowing amount is shown below:

    = Value of home * given percentage - current mortgage amount

    = $200,000 * 80% - $50,000

    = $160,000 - $50,000

    = $110,000

    For computing the accurate value, we have to deduct the current mortgage amount from the net value of home.

    Since only 80% is related to the home value so we take only 80% and rest 20% would be ignored.
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