Chapter 14, Problem 20AT

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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

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:

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

**Calculation:**

Given that appraises value is

First mortgage debt is

Calculate the percentage of appraisal value by the formula

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