Chapter 6 Financial Planning Exercise 5 Home equity line interest

Kai and Ivy Harris have a home with an appraised value of $220,000 and a mortgage balance of only $110,000.

1. Given that an S&L is willing to lend money at a loan-to-value ratio of 80 percent, how big a home equity credit line can Kai and Ivy obtain?
   $   
   

              .80 x $220,000 - $110,000. = 66000

1. How much, if any, of this line would qualify as tax-deductible interest if their house originally cost $100,000?
   $   
   

              $66,000 line