Question

One point on a $80,000 loan for the purchase of a $110,000 home would equal

A) $100.
B) $800.
C) $1,000.
D) $1,100.

Answer 1

The equity on a home loan can be calculated by subtracting the amount still owed to the bank from the current value of the home, which in this case is $250,000.

Step-by-step explanation:

To calculate the equity on a home loan, you subtract the amount still owed to the bank from the current value of the home. In this case, Freda bought a house for $150,000 in cash and the current value is $250,000. Since she owes zero to the bank, her equity is the whole $250,000.

Therefore, the answer is $250,000. This can be found in option B.