Craig and Tammy recently sold their home for 255,000. Their loan balance is 135,680. What is their equity before paying seller´s expenses

Question

I need help solving this problem I don´t know how to solve it please help

Answer 1

Hi Destany,

This questions refers to undertanding what is involved in a loan, and what is equity.

 

If you buy a house with a loan, you have to pay the loan back. When you sell a house, you pay off the loan and anything remaining is the equity, or what you receive back for your house. It's a subtraction problem and understanding the different terms in a loan/equity problem.

 

Selling Price = $255,000

Loan Remaining (that has to be paid off) = $135,680

 

$255,000 - $135,680 = $119,320 house equity.

 

Now you know how much you will get paid back from the house sale, and what is available to cover the selling expenses.