The Taylors have purchased a $270,000 house. They made an initial down payment o

Question

The Taylors have purchased a $270,000 house. They made an initial down payment of $40,000 and secured a mortgage with interest charged at the rate of 7%/year on the unpaid balance. Interest computations are made at the end of each month. If the loan is to be amortized over 30 years, what monthly payment will the Taylors be required to make? (Round your answer to the nearest cent.) $ What is their equity (disregarding appreciation) after 5 years? After 10 years? After 20 years? (Round your answers to the nearest cent.) 5 years $ 10 years $ 20 years $

Explanation / Answer

Value of house $270,000 Less: Down payment $40,000 Finance amount $230,000 Rate 7% per year 7%/12 Monthly Year 30 Period 360 (30*12) EMI $1,530.20 PMT(7%/12,360,-230000) Equity value will be arived at by deducting principals outstanding on the loan From House value, So present value of remaining EMI's will be calculated. Principals outstanding House Value Equity After 5 Yrs $216,503.26 $270,000 $53,496.74 PV(7%/12,300,-1530.2) After 10 Yrs $197,369.03 $270,000 $72,630.97 PV(7%/12,240,-1530.2) After 20 Yrs $131,790.55 $270,000 $138,209.45 PV(7%/12,120,-1530.2)

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