Acme Home Lending offers home equity loans up to 80% of the home value for its customers. If Sally Johnson has a home valued at $200,000 and a current mortgage of $50,000, how much can she borrow in a home equity loan from Acme?

a) $50,000

b) $80,000

c) $110,000

d) $150,000

e) $160,000

c) $110,000

Explanation:

The computation of the borrowing amount is shown below:

= Value of home * given percentage - current mortgage amount

= $200,000 * 80% - $50,000

= $160,000 - $50,000

= $110,000

For computing the accurate value, we have to deduct the current mortgage amount from the net value of home.

Since only 80% is related to the home value so we take only 80% and rest 20% would be ignored.