A house was purchased for $200,000 with a loan equal to 85% of the purchase price...
A house was purchased for $200,000 with a loan equal to 85% of the purchase price and the price is expected to rise to $205,000 at the end of the year. What is the Expected Appreciation rate on Home Equity (rounded)?
10%
2.5%
17%
8%
Homework Answers
| Loan amount = Purchase price * Loan % = 200000 * 85% | 170000 |
| Home equity = Purchase price - Loan amount = 200000 - 170000 | 30000 |
| Expected Appreciation amount = 205000 - 200000 | 5000 |
| Expected appreciation rate = Expected appreciation amount / Home equity = 5000 / 30000 | 17% |
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