Question

A few years ago, Simon Powell purchased a home for $155,000. Today, the home is worth $260,000. His remaining mortgage balance is $105,000. Assuming that Simon can borrow up to 70 percent of the market value, what is the maximum amount he can currently borrow against his home?

Answer 1

$77,000

Step-by-step explanation:

In this scenario the present value of Simon's home is $250,000. It appreciated from purchase price of $155,000

Simon is allowed to borrow 70% of the market value.

Percentage of present value= 0.7 * 260,000

Percentage of present value= $182,000

But he has a mortgage balance of $105,000. This amount will be deducted from $182,000 to give the amount he can borrow

Amount he can borrow= 182,000- 105,000 = $77,000