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Equity and lots of questions in one go

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,You buy a house at \$180,000 and pay 20% down, taking out a 30 year mortgage at 5.5% APR

How much would resulting morgage be?

180000*.20=36000

180000-36000=144000

144000*0.055(1*0.055)^360/((1.055)^360-1)=\$792 Monthly Payment

792*12=9504*30=\$285,120.00 total paid ?

How much interest over the loan?

285120-144000=141120.00?

How much equity would you have after 10 years?

Instructor has not shown us how to get equity? SO I have no clue

Suppose you put an extra \$100 a month toward the payments. HOw much faster will you pay off the loan?

I guess 10 years faster? just guessing at this point

Referencing part d, how much interest will you save by paying the \$100/month?

Apr 22, 2022

2+0 Answers

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You made a mistake in calculating your monthly payment. This is the formula you would use to calculate the monthly payment:

N=30*12; R=0.055/12;PV=144000; PMT=PV*R*((1 + R)^N) / ((1 + R)^(N) - 1)

MORTGAGE PMT =\$ 817.62 -monthly

\$817.62  x  360 months ==\$294,343.20 - principal + interest paid over 30 years.

\$294,343.20  -  \$144,000 principal==\$150,343.20 - total interest paid over 30 years.

Balance of the mortgage after 10 years==\$118,859.03

House equity after 10 years ==180,000 - \$118,859.03 ==\$61,140.97

If the mortgage payment was: \$817.62 + \$100==\$917.62 - the mortgage would be paid off in 278 months==23 years and 2 months. So, the mortgage would be paid off some 82 months earlier, or about 6 years and 10 months earlier.

Apr 23, 2022
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278 months  x  \$917.62 ==\$255,098.36 - principal + interest with the increased pmt. of \$917.62

\$294,343.20 - \$255,098.36 ==\$39,244.84 - interest saved with \$100 extra paid every month over the life of the mortgage.

Guest Apr 23, 2022