Question

"Frank bought a house for $100,000. He put 20% down and borrowed the rest from the bank. However, the value of the house has now increased to $160,000 and he has paid off $20,000 of the bank loan. What is the equity that Frank has in his home

Answer 1

The equity that Frank has in his home is $100000

Step-by-step explanation:

The purchase price of house = $100000

The down payment = 20% or $100000 ×20% = $20000

The remaining amount paid by bank = $80000

The increased value of house = $160,000

Payment of loan amount = $20000

The Value of house is $160000 and he pays $20000 to the bank as a part of loan payment so reaming amount that he has to pay the bank is ($80000-20000) = $60000.

Thus, his equity will be $100000.

Answer 2

$100,000

Step-by-step explanation:

The computation of the equity in his home is shown below;

Given that

Increased in the value of the house = $160,000

And, the amount he has to paid is

= Borrowed amount - down payment

= $80,000 - ($100,000 × 20%)

= $80,000 - $20,000

= $60,000

So, the equity is

= $160,000 - $60,000

= $100,000

hence, the equity value is $100,000