A few years ago, Michael purchased a home for $380,000. Today the home is worth $336,000. His remaining mortgage balance is $142,000. Assuming Michael can borrow up to 80 percent of the market value of his home, what is the maximum amount he can borrow?

The maximum amount he can borrow is $126,800.

Explanation:

Given:

Michael purchased a home for $380,000.

Market value of home = $336,000.

Current mortgage balance = $142,000.

Rate of borrowing at the market value = 80%.

Now, to find the maximum of amount Michael can borrow.

So, we find first the maximum mortgage amount:

Maximum mortgage amount = 80% of market value.

As, he still owes $142,000 mortgage in his home.

Now, to get the maximum amount he can borrow we use formula:

Maximum amount he can borrow = Maximum mortgage amount - Current mortgage balance.

Maximum amount he can borrow

Maximum amount he can borrow

Therefore, the maximum amount he can borrow is $126,800.

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