****How Do I answer this using excel?*** 1. You just purchased a $400,000 house
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****How Do I answer this using excel?***
1. You just purchased a $400,000 house and gave a 20% down payment. For the remaining portion, you obtained a 30-year mortgage at a 6% interest rate. (6 points)
What are the monthly payments on this mortgage?
If the house appreciates at a 3 percent annually, what will be the value of the house in ten years?
In ten years, how much equity will you have on this home?
This is what I have, but not sure if the equity portion is correct.
Total Cost Down Payment Loan amount monthly Installment Value After 10 Years Equity in 10 years 400000 80000 576000 1600 4120000 47.22222222Explanation / Answer
The current value of home is 400000
Amount after 20% payment is 320000
Loan amount for 30 years at 6% rate is 576000 and so EMI is 1600
Now, to calculate your home's value after 10 years = (growth factor) * (current value)
growth factor = (1+0.03)^10 = 1.3439
value after 10 years = 1.3439 * 400000 = 537566.55
After 10 years, you will be left with 576000 - (1600 * 12 * 10) = 384000 of mortgage
Equity after 10 years = Value after 10 years - mortage still left
= 537566.55 - 384000 = 153566.55 is the equity after 10 years
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