Question

I am struggling with this question can someone please help me

​Carlos owns a home that was recently appraised for $132,000. The balance on the existing mortgage is $73,700. If Carlos's bank is willing to loan up to 75% of the appraised value, find the potential amount of credit available on a home equity loan.

Answer 1

75% of value = $99,000.

132000-73700=$58,300

$99000 + $58300 = $157,300

Answer 2

$25,300

Step-by-step explanation:

The amount you can borrow in a home equity loan depends on the equity you have which in this case is the value of the house minus the balance owed on your mortgage. However, the bank may have a maximum ratio allowed as in this case is 75%. To determine the potential amount of credit available on a home equity loan, you have to calculate the 75% of the value of the home which is the maximum amount the bank is willing to lend and you have to subtract from this the balance on the existing mortgage:

$132,000*75%= $99,000

$99,000-$73,700= $25,300

The potential amount of credit available on a home equity loan is $25,300.