Julio has a house worth $220,000. He has a $175,000 mortgage. Julio says that in this situation, his asset is really only $45,000. Which statement explains whether Julio is correct?

Question

Shiloh Bender

Business

28 December, 21:33

Julio has a house worth $220,000. He has a $175,000 mortgage. Julio says that in this situation, his asset is really only $45,000. Which statement explains whether Julio is correct?

+2

Answers (1)

Know the Answer?

Yazmin Bowen · Answer 1

Julio is right because the $45,000 equity in the house is the real asset.

Explanation:

The asset is a resource own by a person or organization that has an economic value. When you are determining the value of your asset, you need to consider if you have a loan on them, as this is a liability that has to be subtracted from the value to get the net worth. So, according to this, Julio is correct because his house has a value of $220,000 but he has a mortgage of $175,000 and when it is subtracted, his asset is $45,000.