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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

Jonathan and Kimberly Schwartz live in a home to which they want to make major improvements. They plan to replace the existing heating and cooling system, remodel the kitchen, and add a room above the garage. To pay for this renovation, they plan to get a home equity line of credit. Their home currently appraises for $298,000. They owe $68,340 on the first mortgage. How much credit will their bank provide if the limit is 75 % of their home’s value?

To determine

To calculate: The amount of credit provided to Jonathan and Kimberly by their bank if the limit is 75% of their home’s value if their current home appraises is $298,000 and they owe $68,340 on the first mortgage.

Explanation

Given Information:

Given that Jonathan and Kimberly’s current home appraises is $298,000 and they owe $68,340 on the first mortgage.

Formula used:

The formula to calculate the percentage of appraised value by:

Percentage of appraised value=Appraised value×Lender's percentage

The formula to calculate the potential amount of credit available by:

Potential credit=Percentage of appraised valueFirst mortgage debt

Calculation:

Given that appraises value is $298,000.

First mortgage debt is $68,340.

Calculate the percentage of appraisal value by the formula

Percentage of appraised value=Appraised value×Lender's percentage

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