Question

Financial institutions provide home equity loans up to ________ of the value of the equity in a home.

A) 75 percent
B) 80 percent
C) 70 percent
D) 85 percent

Answer 1

Financial institutions typically provide home equity loans up to 80 percent of the value of the equity in a home. The value of the equity is the market value of the home minus any remaining mortgage balance.

Step-by-step explanation:

Financial institutions often provide home equity loans up to a certain percentage of the value of the equity in a home. The correct answer to the question is B) 80 percent. This means that if a homeowner has equity in their house—as calculated by the market value of the home minus any outstanding loan balances—they may be able to borrow up to 80% of that equity value in the form of a home equity loan. For instance, if a homeowner has a house with a market value of $250,000 and they owe $100,000 on their mortgage, their equity would be $150,000. In this scenario, they might be eligible to take out up to $120,000 (which is 80% of their $150,000 equity) as a home equity loan.