Donna bought her home several years ago for $200,000. She paid $20,000 down on the purchase and borrowed the remaining $180,000. When the home is worth

$280,000 and the balance on the mortgage is $120,000, she borrows $110,000 using a home equity loan. She uses the proceeds of the loan to acquire a new car, pay off some credit card debt, and pay her children’s tuition at a private school. She pays

$12,600 in interest on the home equity loan.