Question

Problem 4 and 5-7 House Appreciation and Mortgage Payments Say that you purchase a house for $320.000 by using a mortgage for $200.000 dang. $40.000 30 year mortgage with an interest rate of 8 percent what are the mo s t round your final answer to 2 decimal places) What would the loan balance beinten calculations. Round your flawer dhe 2 de the house oreciate at 4 percent per ye calculations and round your answer tod t be the value of the home a s on! How much of wis your equiry? Do not round Intermediate calculations and round your final e deci s

Answer 1

This question can be solved with the help a loan amortization table. A loan amortization table tells us the loan remaining after every period. The construction of the table can be seen as below.

For part d, the equity in the house is equal to the value of the house less the outstanding loan on it.

B7 X fx C D i ] =PMT(B4,B6,-B2) B 320000 |280000 0.08 I=B3/12 30 =B5*12 =PMT(B4,B6,-B2) =F133 0.04 =FV(B9,10,0,-B1) =B10-18 1 Present Value of House 2 Mortgage Amount 3 Annual Interest Rate 4 Monthly rate 5 Mortgage period in years 6 Mortgage period in months 7 Monthly Payments 8 Loan Balance after 10 years 9 Appreciation rate of house annually 10 Value after 10 years 11 Equity 12 13 Month 14 1 15 2 16 3 17 4 18 5 19 6 20 7 21 8 22 9 Opening Loan Amount =B2 =F14 =F15 =F16 =F17 =F18 =F19 =F20 =F21 Monthly Payment =$B$7 =$B$7 =$B$7 =$B$7 =$B$7 =$B$7 =$B$7 =$B$7 =$B$7 Interest Paid =$B$4*B14 =$B$4*B15 =$B$4*B16 =$B$4*B17 =$B$4*B18 =$B$4*B19 =$B$4*B20 =$B$4*B21 =$B$4*B22 Loan Repaid =C14-D14 =C15-D15 =C16-D16 =C17-D17 =C18-D18 =C19-D19 =C20-D20 =C21-D21 =C22-D22 Closing Loan Balance =B14-E14 =B15-E15 =B16-E16 =B17-E17 =B18-E18 =B19-E19 =B20-E20 =B21-E21 =B22-E22

B11 - X V fx =B10-B8 A 30 B 1 Present Value of House Ş 3,20,000.00 2 Mortgage Amount $ 2,80,000.00 3 Annual Interest Rate 8% 4 Monthly rate 0.67% 5 Mortgage period in years 6 Mortgage period in months 360 7 Monthly Payments 2,054.54 8 Loan Balance after 10 years 2,45,629.17 9 Appreciation rate of house annually 4% 10 Value after 10 years 4,73,678.17 11 Equity $ 2,28,049.00 12 13 Month Opening Loan Amount Monthly Payment Interest Paid Loan Repaid Closing Loan Balance 14 1 $ 2,80,000.00 $ 2,054.54 $ 1,866.67 $ 187.87 $ 2,79,812.13 2 $ 2,79,812.13 $ 2,054.54 $ 1,865.41 $ 189.13 $ 2,79,623.00 3 $ 2,79,623.00 $ 2,054.54 $ 1,864.15 $ 190.39 $ 2,79,432.61 4 $ 2,79,432.61 $ 2,054.54 $ 1,862.88 $ 191.66 $ 2,79,240.96 5 $ 2,79,240.96 $ 2,054.54 $ 1,861.61 $ 192.93 $ 2,79,048.02 6 $ 2,79,048.02 $ 2,054.54 $ 1,860.32 $ 194.22 $ 2,78,853.80 7 $ 2,78,853.80 $ 2,054.54 $ 1,859.03 $ 195.52 $ 2,78,658.28 8 $ 2,78,658.28 $ 2,054.54 $ 1,857.72 $ 196.82 $ 2,78,461.47 9 $ 2,78,461.47 $ 2,054.54 $ 1,856.41 $ 198.13 $ 2,78,263.33 10 $ 2,78,263.33 $ 2,054.54 $ 1,855.09 $ 199.45 $ 2,78,063.88 15