You just purchased a $400,000 house and gave a 20% down payment. For the remaining portion,...

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?

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Expert Solution

Below are the formulas used to solve the question.

To find out equity on this home in 10 years we need to prepare loan amortisation schedule.

Period	Opening bal.	Interest	EMI	Principal repaid	Ending bal.
1	3,20,000.00	1,600.00	1,918.56	318.56	3,19,681.44
2	3,19,681.44	1,598.41	1,918.56	320.15	3,19,361.29
3	3,19,361.29	1,596.81	1,918.56	321.75	3,19,039.53
4	3,19,039.53	1,595.20	1,918.56	323.36	3,18,716.17
5	3,18,716.17	1,593.58	1,918.56	324.98	3,18,391.19
6	3,18,391.19	1,591.96	1,918.56	326.60	3,18,064.59
7	3,18,064.59	1,590.32	1,918.56	328.24	3,17,736.35
8	3,17,736.35	1,588.68	1,918.56	329.88	3,17,406.47
9	3,17,406.47	1,587.03	1,918.56	331.53	3,17,074.95
10	3,17,074.95	1,585.37	1,918.56	333.19	3,16,741.76
11	3,16,741.76	1,583.71	1,918.56	334.85	3,16,406.91
12	3,16,406.91	1,582.03	1,918.56	336.53	3,16,070.38
13	3,16,070.38	1,580.35	1,918.56	338.21	3,15,732.18
14	3,15,732.18	1,578.66	1,918.56	339.90	3,15,392.28
15	3,15,392.28	1,576.96	1,918.56	341.60	3,15,050.68
16	3,15,050.68	1,575.25	1,918.56	343.31	3,14,707.37
17	3,14,707.37	1,573.54	1,918.56	345.02	3,14,362.35
18	3,14,362.35	1,571.81	1,918.56	346.75	3,14,015.60
19	3,14,015.60	1,570.08	1,918.56	348.48	3,13,667.12
20	3,13,667.12	1,568.34	1,918.56	350.22	3,13,316.89
21	3,13,316.89	1,566.58	1,918.56	351.98	3,12,964.92
22	3,12,964.92	1,564.82	1,918.56	353.74	3,12,611.18
23	3,12,611.18	1,563.06	1,918.56	355.50	3,12,255.68
24	3,12,255.68	1,561.28	1,918.56	357.28	3,11,898.40
25	3,11,898.40	1,559.49	1,918.56	359.07	3,11,539.33
26	3,11,539.33	1,557.70	1,918.56	360.86	3,11,178.46
27	3,11,178.46	1,555.89	1,918.56	362.67	3,10,815.80
28	3,10,815.80	1,554.08	1,918.56	364.48	3,10,451.32
29	3,10,451.32	1,552.26	1,918.56	366.30	3,10,085.01
30	3,10,085.01	1,550.43	1,918.56	368.13	3,09,716.88
31	3,09,716.88	1,548.58	1,918.56	369.98	3,09,346.90
32	3,09,346.90	1,546.73	1,918.56	371.83	3,08,975.08
33	3,08,975.08	1,544.88	1,918.56	373.68	3,08,601.39
34	3,08,601.39	1,543.01	1,918.56	375.55	3,08,225.84
35	3,08,225.84	1,541.13	1,918.56	377.43	3,07,848.41
36	3,07,848.41	1,539.24	1,918.56	379.32	3,07,469.09
37	3,07,469.09	1,537.35	1,918.56	381.21	3,07,087.88
38	3,07,087.88	1,535.44	1,918.56	383.12	3,06,704.76
39	3,06,704.76	1,533.52	1,918.56	385.04	3,06,319.72
40	3,06,319.72	1,531.60	1,918.56	386.96	3,05,932.76
41	3,05,932.76	1,529.66	1,918.56	388.90	3,05,543.86
42	3,05,543.86	1,527.72	1,918.56	390.84	3,05,153.02
43	3,05,153.02	1,525.77	1,918.56	392.79	3,04,760.23
44	3,04,760.23	1,523.80	1,918.56	394.76	3,04,365.47
45	3,04,365.47	1,521.83	1,918.56	396.73	3,03,968.73
46	3,03,968.73	1,519.84	1,918.56	398.72	3,03,570.02
47	3,03,570.02	1,517.85	1,918.56	400.71	3,03,169.31
48	3,03,169.31	1,515.85	1,918.56	402.71	3,02,766.59
49	3,02,766.59	1,513.83	1,918.56	404.73	3,02,361.87
50	3,02,361.87	1,511.81	1,918.56	406.75	3,01,955.12
51	3,01,955.12	1,509.78	1,918.56	408.78	3,01,546.33
52	3,01,546.33	1,507.73	1,918.56	410.83	3,01,135.50
53	3,01,135.50	1,505.68	1,918.56	412.88	3,00,722.62
54	3,00,722.62	1,503.61	1,918.56	414.95	3,00,307.67
55	3,00,307.67	1,501.54	1,918.56	417.02	2,99,890.65
56	2,99,890.65	1,499.45	1,918.56	419.11	2,99,471.55
57	2,99,471.55	1,497.36	1,918.56	421.20	2,99,050.34
58	2,99,050.34	1,495.25	1,918.56	423.31	2,98,627.04
59	2,98,627.04	1,493.14	1,918.56	425.42	2,98,201.61
60	2,98,201.61	1,491.01	1,918.56	427.55	2,97,774.06
61	2,97,774.06	1,488.87	1,918.56	429.69	2,97,344.37
62	2,97,344.37	1,486.72	1,918.56	431.84	2,96,912.53
63	2,96,912.53	1,484.56	1,918.56	434.00	2,96,478.53
64	2,96,478.53	1,482.39	1,918.56	436.17	2,96,042.37
65	2,96,042.37	1,480.21	1,918.56	438.35	2,95,604.02
66	2,95,604.02	1,478.02	1,918.56	440.54	2,95,163.48
67	2,95,163.48	1,475.82	1,918.56	442.74	2,94,720.74
68	2,94,720.74	1,473.60	1,918.56	444.96	2,94,275.78
69	2,94,275.78	1,471.38	1,918.56	447.18	2,93,828.60
70	2,93,828.60	1,469.14	1,918.56	449.42	2,93,379.18
71	2,93,379.18	1,466.90	1,918.56	451.66	2,92,927.52
72	2,92,927.52	1,464.64	1,918.56	453.92	2,92,473.59
73	2,92,473.59	1,462.37	1,918.56	456.19	2,92,017.40
74	2,92,017.40	1,460.09	1,918.56	458.47	2,91,558.93
75	2,91,558.93	1,457.79	1,918.56	460.77	2,91,098.16
76	2,91,098.16	1,455.49	1,918.56	463.07	2,90,635.10
77	2,90,635.10	1,453.18	1,918.56	465.38	2,90,169.71
78	2,90,169.71	1,450.85	1,918.56	467.71	2,89,702.00
79	2,89,702.00	1,448.51	1,918.56	470.05	2,89,231.95
80	2,89,231.95	1,446.16	1,918.56	472.40	2,88,759.55
81	2,88,759.55	1,443.80	1,918.56	474.76	2,88,284.79
82	2,88,284.79	1,441.42	1,918.56	477.14	2,87,807.65
83	2,87,807.65	1,439.04	1,918.56	479.52	2,87,328.13
84	2,87,328.13	1,436.64	1,918.56	481.92	2,86,846.21
85	2,86,846.21	1,434.23	1,918.56	484.33	2,86,361.88
86	2,86,361.88	1,431.81	1,918.56	486.75	2,85,875.13
87	2,85,875.13	1,429.38	1,918.56	489.18	2,85,385.95
88	2,85,385.95	1,426.93	1,918.56	491.63	2,84,894.32
89	2,84,894.32	1,424.47	1,918.56	494.09	2,84,400.23
90	2,84,400.23	1,422.00	1,918.56	496.56	2,83,903.67
91	2,83,903.67	1,419.52	1,918.56	499.04	2,83,404.63
92	2,83,404.63	1,417.02	1,918.56	501.54	2,82,903.09
93	2,82,903.09	1,414.52	1,918.56	504.04	2,82,399.05
94	2,82,399.05	1,412.00	1,918.56	506.56	2,81,892.48
95	2,81,892.48	1,409.46	1,918.56	509.10	2,81,383.38
96	2,81,383.38	1,406.92	1,918.56	511.64	2,80,871.74
97	2,80,871.74	1,404.36	1,918.56	514.20	2,80,357.54
98	2,80,357.54	1,401.79	1,918.56	516.77	2,79,840.77
99	2,79,840.77	1,399.20	1,918.56	519.36	2,79,321.41
100	2,79,321.41	1,396.61	1,918.56	521.95	2,78,799.46
101	2,78,799.46	1,394.00	1,918.56	524.56	2,78,274.89
102	2,78,274.89	1,391.37	1,918.56	527.19	2,77,747.71
103	2,77,747.71	1,388.74	1,918.56	529.82	2,77,217.89
104	2,77,217.89	1,386.09	1,918.56	532.47	2,76,685.42
105	2,76,685.42	1,383.43	1,918.56	535.13	2,76,150.28
106	2,76,150.28	1,380.75	1,918.56	537.81	2,75,612.48
107	2,75,612.48	1,378.06	1,918.56	540.50	2,75,071.98
108	2,75,071.98	1,375.36	1,918.56	543.20	2,74,528.78
109	2,74,528.78	1,372.64	1,918.56	545.92	2,73,982.86
110	2,73,982.86	1,369.91	1,918.56	548.65	2,73,434.22
111	2,73,434.22	1,367.17	1,918.56	551.39	2,72,882.83
112	2,72,882.83	1,364.41	1,918.56	554.15	2,72,328.68
113	2,72,328.68	1,361.64	1,918.56	556.92	2,71,771.76
114	2,71,771.76	1,358.86	1,918.56	559.70	2,71,212.06
115	2,71,212.06	1,356.06	1,918.56	562.50	2,70,649.56
116	2,70,649.56	1,353.25	1,918.56	565.31	2,70,084.25
117	2,70,084.25	1,350.42	1,918.56	568.14	2,69,516.11
118	2,69,516.11	1,347.58	1,918.56	570.98	2,68,945.13
119	2,68,945.13	1,344.73	1,918.56	573.83	2,68,371.30
120	2,68,371.30	1,341.86	1,918.56	576.70	2,67,794.60

Equity on home = 537566.55 - 267794.6 = $269,771.96

Note:

1. Interest = Opening bal*6%*1/12
2. Principal repaid = EMI - Interest
3. Ending bal. = Opening bal - principal repaid

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