Question

Assume that you bought a $300,000 house and got a $240,000 mortgage on it. If the house is currently valued at $200,000, the underwater amount of this house is _______.

a. $100,000
b. $60,000
c. $40,000
d. Unknown

Answer 1

The underwater amount of a house purchased for
`$300,000` with a
`$240,000` mortgage, which is now valued at
`$200,000` is the difference between the mortgage owed and the current house value; hence, it is
`$40,000.`
`$`
`$`

Step-by-step explanation:

Assuming that you bought a
`$`
`$300,000` house and got a
`$240,000 \\` mortgage on it, if the house is currently valued at
`$240,000`.

The underwater amount of this house is calculated as the difference between what is owed on the mortgage and the current value of the house. In this case:

Mortgage owed:
`$240,000\\`
Current house value:
`$200,000`
Underwater amount: Mortgage owed - Current house value
Therefore, the underwater amount is, which equals
`$40,000.`

The underwater amount of this house is
`$40,000` which corresponds to option c.