Question

Shelly bought a house five years ago for $150,000 and obtained an 80% loan. Now the home is worth $140,000 and her loan balance has been reduced by $12,000. What is Shelly's current equity?

Answer 1

Answer:

The current equity is $32,000

Step-by-step explanation:

Here, we are to calculate the current equity of the House

Value of house initially is $150,000

loan borrowed is 80% of this

= 80/100 * 150,000 = $120,000

Now the house value is 140,000 and the loan amount is reduced to 12,000

The outstanding loan amount to pay would be 120,000-12,000 = 108,000

The current equity is thus = Assets - liability = 140,000-108,000 = $32,000