Homer Simpson bought a house for $70,000 some years ago. Heput 20% down and fina

Question

Homer Simpson bought a house for $70,000 some years ago. Heput 20% down and financed the rest with a 25 year mortgage of 8.5%interest. Home has made 168 payments on the house. The house is now worth $210,000 How much equity does Homer have in the house? Must show work and logic on how to get answer. Homer Simpson bought a house for $70,000 some years ago. Heput 20% down and financed the rest with a 25 year mortgage of 8.5%interest. Home has made 168 payments on the house. The house is now worth $210,000 How much equity does Homer have in the house? Must show work and logic on how to get answer.

Explanation / Answer

25 years

8.5%/12

8.5%/12

Total Purchase Value of house $70,000 Less: Down Payment ($70,000 *20%) $14,000 Remaining balance forfinancing $56,000 Number of years

25 years

Interest rate 8.50% Calculating Monthly Payment: (Using MS-Excel "PMT"Function) Interest rate (Rate)

8.5%/12

Number of Payments (25 * 12) 300 Present Value of Loan Amount (PV) -$56,000 Monthly Instalment Amount(PMT) $450.93 Calculating Present Value of 168 payments: (Using Ms-Excel "PV"Function): Interest rate (Rate)

8.5%/12

Number of Payments (Nper) 168 Monthly Payment Amount (PMT) $450.93 Present Value (PV) $44,212.35 Remaining balance of LoanAmount = $56,000 - $44,212.35                                                           =   $11,787.65 Remaining balance of Loan Amount =$11,787.65 Owner's equity = DownPayment + Present Value of 168 payments Total Owner's equity = $14,000 + $44,212.35 Total Owner's equity =$58,212.35

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.